No plans to help small firms be ‘family friendly’
THERE will be no exemption or help for small business, the government confirmed on Wednesday, as it pushed ahead with plans to increase leave and benefits for new parents.
It was also revealed that ministers want to make businesses, high earners and the self-employed pay for the changes.
The announcement has fuelled fears for the future of small businesses with an assistant minister admitting there are no plans to support them as the government moves to increase social security contributions and parental leave.
Social Security Minister Judy Martin has lodged revised ‘family friendly’ legislation after temporarily withdrawing her proposed laws in June due to a number of concerns being raised, such as the impact on the Island’s smallest firms.
If the new legislation is passed, new fathers and mothers will be entitled to 52 weeks of parental leave, including six weeks of paid leave.
Deputy Martin’s proposition also outlines plans for both parents, not just mothers, to become entitled to parental allowance early next year. Currently maternity allowance of £216.86 a week is provided for up to 18 weeks for new mothers.
The proposition says that the new allowance would be funded by increased social security contributions for employers and class 2 contributors, which include self-employed individuals, students, those looking after a family and people who are not working – raising an estimated £3.35 million per year.
Under the plans, contributions on income above the Standard Earning Limit of £53,304 would increase from January 2020 as follows:
- the Upper Earnings Limit – the maximum level of earnings that is taken into account for contribution purposes – would increase from £176,232 to £250,000
- the percentage rate levied on earnings above the Standard Earnings Limit (£53,000–£250,000) would increase by 0.5% from 2% to 2.5%
These proposals are scheduled to be debated shortly after the Government Plan in November.
In her proposition, Deputy Martin has also dismissed concerns about the impact of the Family Friendly laws on the smallest businesses in the Island after St Mary Constable John Le Bailly lodged an amendment to exempt firms employing five or less workers from her proposals.
Mr Le Bailly said that he tabled his amendment with the support of 50 local businesses, who fear the proposals could cause staffing difficulties.
‘The children of parents who work for small businesses do not deserve a lower level of protection than the children of parents who work for larger companies,’ Deputy Martin’s proposition says, explaining her position.
‘The effect on employees who suffer a detriment, dismissal or discrimination is the same, whatever the size of the business.
‘Businesses have reported finding it increasingly difficult to recruit staff. Employees are less likely to be attracted to work in a small business if that employer will not support them when they have a family.’
Assistant Social Security Minister Jeremy Maçon said that there was nothing in the new legislation designed to support small businesses as the legislation is introduced.
‘This particular legislation won’t address that. We will work with the Employment Forum on this and after two years the legislation will be reviewed to assess the impact on businesses,’ he said.
‘If there are any huge concerns then we will look at those. It is still a living piece of legislation.’
He added that the parental allowance would help support smaller businesses by providing benefit payments for fathers who wish to take parental leave.
Chamber of Commerce chief executive Murray Norton said that he had been ‘disappointed’ with the lack of recent consultation between the government and business over the proposed family friendly proposals.
And he added that Deputy Maçon’s indication that there would be no help for small firms in the legislation was ‘unhelpful’.
‘We have heard from a lot of small businesses who are concerned by this legislation and they still have not had their concerns addressed,’ he said.
‘For smaller firms it could be very difficult for them to recruit the staff they need while an employee is on parental leave.
‘For there to be no support for them in this legislation and the assistant minister to say that is unhelpful.’
Jersey’s Social Security contribution levels:
Up to the Standard Earnings Limited of £53,302
Employee pays 6%
Employer pays 6.5%
Between Standard Earnings Limited and Upper Earnings Limit (currently £176,232 but increasing to £250,000 under Deputy Martin’s plans)
Employee pays nothing
Employer pays 2% (increasing to 2.5% under Deputy Martin’s plans)
Class 2 contributors, which includes self-employed people, effectively pay both employee and employer’s social security