Newly defined small businesses to be released from reporting requirements

• Government has announced that more businesses will be categorised as small businesses, potentially meaning that thousands more businesses will be released from reporting requirements and other regulations in the future
• Currently a small business is categorised by the EU as a business with less than 250 employees, but from 3 October 2022 a small business will be a business with fewer than 500 employees
• The Government announcement sets out the UK is free to take their own view from the current limit set out by the EU, and can apply this to retained EU law, currently under review
• Currently, Government’s starting assumption is that businesses with less than 50 employees should be exempt from certain regulations, however the new assumption will be businesses with less than 500 employees should be exempt
• Government will look at plans to potentially extend the threshold to businesses with 1,000 employees, once the impact on the current extension is known

Aspire comment

Trade unions are already scrutinising this decision, however Government has stated the exemption will be applied in a proportionate way to ensure workers’ rights and other standards are protected, while reducing the burden of dealing with regulation.

It will apply to all new regulations, as well as those under current and future review, including the retained EU laws.

For example, gender pay gap reporting has been in place since 2017 for employers with a headcount of 250 or more on a “snapshot date”, but this is one example where the threshold for UK businesses could potentially be amended to employers with a headcount of 500 or more, subject to legislative amendment.