Dear Prime Minister: Create the Small Business Employment Contract

Entrepreneur Jonathan Scott has an idea he believes can stimulate UK growth and employment. Do you agree?

Dear Prime Minister is a new open-platform series on LondonlovesBusiness.com. If you have an idea you think could help businesses, email it to [email protected].

 

The Right Honourable David Cameron
Prime Minister
10 Downing Street
London SW1A 2AA

21 June 2012

Dear Prime Minister,

How to create hundreds of thousands of jobs in the UK, quickly and easily.

I have an idea which I believe will create more new jobs in this country than anything previously proposed by government.

It is to turn every single one of the millions of companies, partnerships and one-man-bands in Britain, like mine, that employ no one, into potential recruiters.

Today the list of potential pitfalls for a new employer are so great that they actively disincentivise new employment.

Putting aside the challenge of making staff effective in a business, there are so many threats, as well as perceived threats, to employing staff that millions of people like me would rather avoid the hassle altogether.

When we need help we may occasionally pay people for casual work. Or perhaps employ another company, temporarily, to do things we can’t do ourselves. What we don’t do is recruit, train and develop today’s young talent and the future employers of tomorrow, because successive governments, EU directives, union pressure, court and tribunal precedents and years and years of employment law have simply made it too risky and too much hassle.

My idea cuts through all of this.

By way of background, I spent 18 years in a company where I was taught about working and developing teams, managing people, incentivising them and getting the most out of people. I managed staff for most of that time and subsequently, when I left to set up a new business, used that knowledge to navigate through the minefield of being an employer. And I was successful. I sold that business and the staff who helped me have gone on to prosper and succeed.

But today, I groan at the thought of employing people. There are millions like me who haven’t had my advantages, who don’t have the support of admin, accounts and HR teams, who think that the prospect of becoming an employer is not ultimately worth the risk. For me and them, our businesses are restricted by this. For today’s unemployed, their opportunities are diminished by this.

And yet if even a tenth of those companies took on just one new person in the next year, imagine the impact on the British economy, unemployment, welfare payments, social unrest, and so on.

So here’s my idea.

Do you remember 30 years ago when legislation introducing the secured shorthold tenancy agreement was brought in? Prior to that, landlords were so overwhelmed with the pitfalls of letting out their property – getting rent paid, getting tenants out if they defaulted, dealing with squatters who refused to move – that they simply chose not to rent their properties at all. The perception, and the reality, was that legislation so favoured the tenant as to disadvantage the landlord – so landlords chose not be landlords anymore.

Everyone lost out. Then, one day, new legislation introduced a new contract which made landlords happy to rent their properties again because it limited the downsides of doing so. Now, of course, there is a boom in buy-to-let.

This is the solution I now propose for employers. My idea is for legislation to bring into being a new form of employment contract. It will do away with both the myths and the realities of being an employer by getting rid of the risks to small businesses, as well as making it extremely simple. It will overcome the belief by millions of potential employers that legislation so favours the employee as to be prohibitive.

Let’s call it the Small Business Employment Contract, SBEC.

–       Only available for businesses that employ up to 3 people.

–       Just two variables for employers to decide. The hourly rate of pay (minimum £5, maximum £10). And the number of hours per week, (minimum 25 hours).

–       Employers literally go online, enter the name of their business/company/partnership, the name of the employee, the hourly rate and the number of hours per week, and print off an employment contract. That’s it.

The main terms of SBEC:

1.     No national insurance payable – either by employer or employee.

2.     No tax payable – by staff or employer.

3.     No government benefits, payments, student loans etc to be managed by employer.

(These first three provisions do away with the need for employers to use an accountant or complicated software to manage payroll. Employers simply multiply hours worked by hourly rate and pay this amount to the employee each month).

4.     One week’s notice on either side. Increases to one month after 6 months.

But for the duration of the contract, the employer can simply terminate agreement at will without reason or justification, thereby removing all fears about getting rid of staff.

5.     All standard employer responsibilities and liabilities waived. Criminal law remains, but if an employee doesn’t like the job or employer, they simply leave.

6.     Maternity cover waived. No responsibility to offer maternity payments, nor keep jobs open for returning staff, etc.

(These last two provisions overcome threats, both real and perceived, that by employing people one is creating all kinds of contingent liabilities.)

SBEC can be introduced quickly with some emergency legislation. Potential employers will readily understand it. Voters will understand why it’s necessary. And suddenly millions of people who dismiss or put off the idea of recruiting staff to help them grow their business will see how simple and risk-free it is.

The UK needs jobs now. Jobs create wealth, opportunity, social cohesion and responsible citizens. They provide purpose and meaning to people’s lives. They create the means for people to stand on their own feet and improve their lot. They remove dependency on welfare and the state. Jobs improve health and happiness.

For too long legislators have conspired with trade unions, minority groups, employment lawyers and the media to make only large businesses, with centralised admin, accounts and HR departments, easily capable of employing people. For everyone else, employment is fraught with hassle and risk. It’s a nightmare.

This new contract removes the hassle, removes the risk and opens the door for millions of new employers to fulfil their potential to create millions of new jobs.

Yours sincerely,

Jonathan Scott

Do you agree with Jonathan? Leave your comments below.

Dear Prime Minister is a new open-platform series on LondonlovesBusiness.com. If you have an idea you think could help businesses, email it to [email protected].