The burden of the Employment Law weighs heavily on small businesses and as a result acts as a disincentive to employment, says Lindsay Edwards-Thatcher of TM Legal Services.

A recent report into the effects of Jersey’s Employment Law found that small businesses are struggling to cope with the responsibilities placed upon them. As a result, small business leaders, who do not have the luxury of a human resources department, have to deal with employment and disciplinary issues themselves whilst also trying to run a business in the midst of a recession.

Because small business leaders have neither the expertise nor the time to ensure that their disciplinary processes meet the letter of the law, they are at risk of losing at tribunal hearings on technical issues alone, irrespective of whether the employee’s behaviour was reasonable or not.

Whilst the Council of Ministers makes a great deal of noise about wanting to reduce unemployment, it remains the case that one of the greatest obstacles to reducing it is the Employment Law itself. The law is proving to be impractical for small businesses, piling so many rules and regulations onto them that they are put off hiring more staff, or for the smallest businesses, they are put off hiring anyone at all.

In the UK, the government has seen that a balance has to be struck, particularly during times of economic difficulty and they have moved to introduce charges for tribunal hearings, which ensures that only valid claims are brought. Most importantly, they have extended the period that someone needs to be employed before they are covered by the Law from one to two years. In Jersey, we are still using a six month period, which is far too short and acts as a clear disincentive to increasing employment.

It should not be forgotten that small businesses form by far the largest part of Jersey’s economy and they can therefore make a huge difference to the unemployment problem. However, without the States of Jersey moving to relieve the burden of the Employment Law, small businesses will continue to find it hard to start hiring.
Adding to the problems

On top of the problems caused by the Employment Law, small businesses are also facing the added burden of a new Discrimination Law.

It is understandable that the States of Jersey wish to tackle the issue of discrimination and whilst it is easy to applaud and understand the reasoning behind the law, the timing could not be worse.

We are still caught in a deep recession with businesses struggling and having to work extremely hard to keep new business coming in. The States of Jersey could hardly have chosen a worse time to add to the bureaucratic burden with which small businesses have to deal. The timing is made to appear particularly galling given that the Discrimination Law is not a new idea and has been on the list of things for the government to do for many years.
It seems that the States of Jersey is in danger of shooting itself in the foot by introducing a law which makes employment even less attractive. As a result, it is quite possible that it will serve to increase the unemployment problem and add to Jersey’s economic problems.
The States of Jersey and the Council of Ministers need to consider very carefully the effects of increasing regulation for small businesses. They should look very hard at the option of loosening regulations in order to make employment easier for Jersey’s small business leaders who are rarely recognised for the huge amount of work they do in maintaining Jersey’s economy and community.

Employment laws are all about balancing the need for employee protection alongside the need to maintain a vibrant and growing economy. Unfortunately, it seems to be the case that Jersey’s employment laws, although still young, have already become so convoluted and burdensome that there is every chance that they are having a negative economic effect and have become a barrier to employment, which is the last thing people want.
If the States of Jersey are genuinely committed to tackling unemployment, then they need to look at reducing the size scope of the Employment Law. If they fail to do so, then it is likely that Jersey’s unemployment problem will be here to stay.