How PM’s plans to cut red tape might affect employers 

As part of a package of reforms aimed at ‘boosting productivity’ and ‘supercharging growth’, Prime Minister Liz Truss, has announced plans to remove reporting obligations such as gender pay gap reporting and regulations on workers’ rights from all businesses who employ less than 500 employees. Currently, SME’s (those with fewer than 250 employees) are exempt from certain regulations. This change in threshold has effect from 3 October 2022 and the government go on to state that they will look at plans to potentially extend the threshold further to businesses with fewer than 1,000 employees. It comes as part of a ‘sweeping package of reforms to cut red tape’ and aims to exempt tens of thousands of UK growing businesses from future regulations which could potentially save them thousands of pounds. 

The government has reported  that many medium sized businesses i.e. those with between 50 and 249 employees report that they are spending, on average, over 22 staff days per month dealing with regulation (as found in a 2020 Business Perceptions Survey. They state that over 50% of businesses consider regulation to be a burden and so the reforms aim to ‘remove bureaucratic and burdensome regulations’ to save businesses time and money. Whilst the removal of certain reporting obligations may be welcomed by some businesses, there may be others who want to continue on a voluntary basis, for example, support their own Equality, Diversity, and Inclusion initiatives. 

The government claims that the exemption will be applied ‘in a proportionate way to ensure workers’ rights and other standards will be protected’. However, the plans raise serious concerns about the consequences for employees and with reports that such plans could ‘turn the clock back for women at work’ if businesses with less than 500 employees are no longer required to report their gender pay gap and that the changes ‘represent real threats to workers’.  

In addition to this, there have also been reports from the Conservative Party Conference that consideration has been given to proposals of Business Secretary Jacob Rees-Mogg, to slash workplace rights including introducing a form of no-fault dismissal for higher earners, removing rights for agency workers and a repeal of the Working Time Directive/48-hour week. The Financial Times however has reported that the Prime Minister has “quashed a series of half-baked ideas” and that there will not be a ‘bonfire of employment regulation’. There appears to be tension on the way forward and such proposals could lead to a significant change to existing regimes. If proposals for no-fault dismissal were to be introduced, for which the earning threshold for this has been proposed at £50,000 and £100,000, this would be a substantial departure from the existing unfair dismissal position. These reports are likely to spark a hostile reaction but the extent of and precise details of any proposed changes remain unclear. We will continue monitor carefully and update on any proposed changes.