Small Business, Enterprise and Employment Bill; What it means for your business

On Christmas Day during the Queen’s speech new legislation was announced (although you could have been forgiven for missing it); the Small Business, Enterprise and Employment Bill (SBEE).

Overview

The SBEE has been enacted in response to the recession of 2008 to not only try and provide some transparency into the ownership of UK companies but also to help small/medium businesses (SME’s).

While the SBEE will implement numerous changes to existing legislation we have picked some key areas for the owners of SME’s to take note of:

‘Zero Hour’ Contracts

Whilst  ‘zero hour’ contracts provide flexible working solutions for many businesses  (over a million UK workers were on ‘zero hour’ contracts last year), the SBEE will adopt new laws to counter the abuse by employers of this type of working arrangement.  The most significant amendment will result in any exclusivity clause contained in such contracts, which generally prohibits workers form working for more than one employer, being unenforceable.

Furthermore, the SBEE will also delegate to the Secretary of State wide powers to impose financial penalties on any employers found to be abusing  ‘zero hour’ contracts and even conferring rights to ‘zero hour’ workers.

Company Structure

The SBEE also now requires all companies from January 2015 to create, keep and maintain a publically available register of any person or body with significant control of the company. Significant control is defined as being an individual that alone (or jointly) either owns (directly or indirectly) 25% of either shares or voting rights in a company or has the right to exercise significant influence over the company.  This register can either be kept at the company’s registered address or at Companies House.

There are sanctions, applicable to both the company and individuals, for failing to create or maintain such registers as set out in Schedule 1B of the Companies Act 2006, including the issuing of a restriction notice on a defaulting party that would severely limit their influence in the company.

Filing

Perhaps the most notable change being introduced by the SBEE is that there will no longer be an obligation on a company to file an Annual Return. Instead the company would file a confirmation statement at Companies House stating that it has delivered all information it was required to provide in the period to which the confirmation statement relates. This must be done within 14 days of the relevant review period which shall be every 12 months from the date of the company’s incorporation date. This change is due to become effective in April 2016.

Limitations

Despite the number of potentially positive changes that the SBEE will make there is one area where critics argue that it has not gone nearly far enough. Earlier this year we reported on the crippling effect that late payments from large organisations were having on small suppliers. Yet, despite the public outcry regarding this, including comments from the Business Secretary Vince Cable, the SBEE only requires large companies to publish the number of days they take to pay their suppliers on average. Critics argue that this will do little to moderate behaviour and the government should have insisted on a statutory maximum on the time taken to pay suppliers.

Conclusions

Only time will tell if the SBEE actually achieves its objectives. There are concerns however that the cost of implementing the required changes far outweigh the benefit that SME’s stand to gain.

David-Paterson-55510-BW

David Paterson
Partner Corporate
Commercial Department
DPaterson@LawBlacks.com
0113 227 9341

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