Compliance costs and how to tame them

After its member survey showed the average small and medium-sized employer saw, in 2014, an above-inflationary rise of £713 in annual compliance costs, the Forum of Private Business provides advice on how to cut the bill.


By Jo Eccles

THE fact that business costs are on the rise probably comes as no surprise to most small-business owners. External costs accounted for most of the increase in annual compliance bills for small firms, which at 6% is well above the current rate of inflation and twice the rate of internal costs.

Many of the increases were associated with the need to implement Real Time Information (RTI) to existing pay roll provision, following the 12-month extension for small businesses.
RTI is up and running but small firms must now focus their attention on the cost of pensions auto-enrolment, which by its very nature is going to be hugely more expensive than RTI to set-up, deliver, and maintain.
Failure to be aware of and act on changes to rules and regulations can bring consequences that prove even more costly. However, there are some tips that can help you save money while you stay on the right side of the law.

1 Be prepared (and prepare early)
When it comes to getting ready for law changes, particularly the big ones like auto-enrolment, it pays to prepare well in advance. While you cannot escape the costs that will be involved you can keep them down and reduce the impact on your business if you do your homework and budget carefully.
Getting the right software in place is just one way that you can make real savings, as many major payroll package providers will include updates for big changes such as RTI and auto-enrolment as standard.

2 Keep up to date
Surprisingly, when questioned, it is pressure on time, not money, that’s given as the main impact on our members of red tape. If staying up-to-date with the latest changes is the main issue for you, it pays to identify one or two trusted sources of information that will ensure that you are aware of all the law changes and key dates well before they happen.

3 Take advice then act
With average employment tribunal costs in the region of £9,000 and average health and safety penalties reaching £16,730 it pays to seek advice to ensure you stay on the right side of the law. You should also ensure that whatever source you decide to go with is insured to protect you should the worst happen.

4 It pays to shop around
Outsourced compliance services are just like any other service you decide to buy in – you can always look for a better deal. Quite often you may find that you can find combined packages that provide employment law, health and safety and contract advice with the extra piece of mind of insurance cover.

5 Delegate
If you are single-handedly running your own business and managing all your legal compliance, then it might be time to share some of that responsibility with others in your organisation. You may want to appoint a health and safety officer or someone in charge of HR. Delegating doesn’t mean you are no longer responsible, but it could free up some of your valuable time for you to concentrate on what you do best – growing you business.

• Jo Eccles is a business adviser at the Forum of Private Business. For further information visit