General election: How it could impact SMEs

What does it mean for small businesses and what do they want to see?

General election: How it could impact SMEs

Prime Minister Rishi Sunak has announced an early UK General Election on July 4, 2024. Parliament will now be suspended on Friday before it is formally shut down on Thursday next week ahead of an official five-week election campaign. With a general election a few weeks away, what do SMEs want to see from the next government? And how will a general election impact small and medium-sized businesses? 

A general election will finally give some clarity to businesses amid a year of change. SMEs are already under pressure to deal with economic uncertainty ahead, with many still feeling the effects of the recession, the Ukraine-Russia war, the cost-of-living crisis and the pandemic. The uncertainty in the run-up to the general elections causes the value of the pound to fluctuate against major currencies, putting further pressure on goods and services sourced from overseas. 

SMEs are the backbone of the economy, so it is vital parties put forward pledges that support small businesses to gain a favourable vote. National Chair of the Federation of Small Businesses (FSB), Martin McTague, said: “Small business owners and self-employed people across the country will be looking for which party puts forward the most compelling pro-growth, pro-business policies to stimulate the economy and encourage entrepreneurship.”  

“The hard-working voters running the UK’s 5.5 million small firms are a large and motivated section of the electorate. A further 16 million voters are employed by small businesses. There will be fierce competition for their votes at this election, and those competing will need a convincing plan to bring down the cost of doing business, support small businesses to grow, and create the right conditions to encourage new businesses to start up. As the campaign begins, each party will need to put forward a clear small business offer or manifesto.” 

Business owners are urging the next government to champion SMEs in order to leverage the UK’s position as an economic superpower. Khalid Talukder, Co-Founder, DKK Partners said: “The upcoming July election is a pivotal moment for the UK to champion business and technology as key drivers of economic recovery. Despite current challenges, Britain can leverage its position in innovation and international trade. The next government must prioritise policies that support the business and tech sectors, including investment in robust payment systems and attracting private investment. This will enable businesses to expand into new markets, drive technological advancements, and generate fresh revenue streams. As we approach the election, focusing on strategic initiatives to bolster the economy is crucial.” 

There will be massive changes to employment law with promises from each party made around workplace reform. In 2024 alone, we’ve seen plenty of changes to employment law, with the potential for more to come. Katie Elliott, director at HR Katie said: “The Labour Party’s current manifesto could significantly impact businesses of all sizes. The proposed reforms to workers’ and employment rights will create a busy period for HR professionals as businesses will need to more carefully evaluate the feasibility of hiring decisions under these new regulations. One of the key changes is the plan to grant full employment rights to all workers from their first day, which will lead to many questions about the right way forward for businesses of all sizes.” 

Kate Palmer, Employment Services Director at Peninsula, the global HR, Health & Safety, and employment law advisory company, took a look at the main political parties and the promises being made around workplace reform. “There are 10 new employment laws that have taken effect already. If the Conservatives win re-election this should continue as planned,” she said. The changes which have already been announced include neonatal care leave and pay, reform of industrial action laws, the ‘Back to Work’ plan, proposed reform of fit notes, reform of the umbrella company market, continuation of the National Disability Strategy, reintroduction of employment tribunal fees, reform of non-compete clauses, TUPE reform and addressing the definition of ‘sex’ in the Equality Act 2010. 

“The Labour Party manifesto has laid out approximately 60 changes to employment laws that they would look to bring in, should they win the General Election,” Kate Palmer added. The main areas of change that business owners should be aware of if Labour win the election include day one rights – removing the qualifying periods for basic rights such as unfair dismissal, sick pay, and parental leave. Labour also plan to ‘remove’ the current distinction between employees and workers. This includes strengthening existing rights and protections, including those for pregnant workers, whistleblowers, workers made redundant and those subject to TUPE processes. Other plans in Labour’s manifesto include raising wages for workers, increasing Statutory Sick Pay, acting to close gender, disability and ethnicity pay gaps, permitting equal pay comparisons across employers where comparable work is carried out, and introducing mandatory publication of ethnicity pay gap for all firms with more than 250 staff.  

They also aim to make it a requirement for employers to create and maintain workplaces and working conditions free from harassment, including by third parties. They hope to make flexible working a default right and introduce family-friendly protections such as bereavement leave making it unlawful to dismiss pregnant employees for six months after their return from maternity leave except in specific circumstances, and reviewing the shared parental leave system. 

In their manifesto, Labour says they want to strengthen the rights of workers to respond to family emergencies with paid family and carer’s leave, flexible working, and a greater ability for workers to enforce their rights. They also aim to implement new laws on zero hours contracts – banning ‘one-sided’ flexibility, improving the information and consultation procedures, and adapting unfair dismissal and redundancy legislation to prevent workers from being dismissed for not agreeing to less favourable contract terms. 

Labour plans to raise awareness of neurodiversity and review workplace provisions for stress, mental health and long Covid, introduce a new right to disconnect and protection for workers from remote surveillance as well as strengthen the trade union’s right of entry to workplaces. In their pledge, they aim to extend the time limit for bringing employment tribunal claims and remove the compensation caps. The Liberal Democrats have not released a full manifesto yet, so not much is known at this stage. They have, however, made some pledges around changes to parental leave and paternity pay.

Latifa Yedroudj
Latifa Yedroudj

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