Future Army 2020

Written evidence from the Federation of Small Businesses

With around 200,000 members, the Federation of Small Businesses (FSB) is the UK’s leading business organisation representing the interests of the self-employed and those who run their own business. Small businesses make up 99.3 per cent of all businesses in the UK, and make a huge contribution to the UK economy. They contribute 51 per cent of the GDP and employ 58 per cent of the private sector workforce.

We welcome the broad approach to the Reserve Force of Army 2020 and in particular the measures within the Defence Reform Bill to support and encourage businesses to employ a member of the reserve forces. The FSB has long recognised the potential value and benefits that members of the reserve forces can bring to a business. We have had a positive relationship with SaBRE for a number of years now and work together to give effective advice and support to small businesses employing Reservists. We think that this support can be continuously built on and improved. It is particularly important that the MoD appreciates the views of small and micro businesses and how the proposed changes to the reserve forces may impact on them.

The research findings in this submission are based on a snap poll made available to the FSB ‘Voice of Small Business’ Survey Panel during December 2012 and January 2013. 6,352 panel members were invited to take part in the poll designed and hosted by Research by Design. The fieldwork took place between Monday 17 December 2012 and Thursday 3 January 2013. One reminder email was sent to non- respondents and 1,836 responses were received representing a 29% response rate.

The main findings from the poll showed that:

· Almost 40 per cent (38 per cent) of small businesses would consider employing a Reservist in the future and 7 per cent currently or have previously employed a Reservist

· Of those who would consider employing a Reservist and those who currently or have previously employed a Reservist, there are mixed views with regard to the likely impact on businesses of the proposed changes to increase the commitment of reserve forces; two in five believe the proposed changes will negatively impact on their business, whereas 43 per cent claim there will be no impact

· Approximately half of small businesses (48%) said that they would ideally require two to three months notice if one of their employees were to be mobilised to minimise the impact on their business

· There are a number of areas where businesses could be incentivised to take on a Reservist. Businesses would appreciate a financial incentive (39 per cent), help in finding replacement staff (30 per cent) and flexibility in training schedules (21 per cent)

· FSB members are particularly keen on any Government support specifically targeting the needs of small and micro businesses rather than big business; it’s clear for example that most small businesses (89 per cent) have not heard of MoD employer awareness events

· Businesses believe that potential employees should always be clear and upfront and inform the business if they are Reservists (95 per cent)

Our comments on Army 2020 are very much focused on the increased role of the Reserve Force and the impact that this will have on businesses that employ reservists.

Call out of members of reserve forces

The FSB has had concerns regarding the intention to extend the call-out powers in the Reserve Forces Act 1996 so that members of the reserve forces may be called out for any purpose for which regular forces may be used. On average FSB members employ approximately 7 employees, so if one is a member of the reserve forces and called out, instantly a significant proportion of the workforce becomes absent. There are mixed views from the small business community with regard to the likely impact on businesses of the proposed changes to increase the commitment of reserve forces; two in five of those open to employing Reservists believe the proposed changes will negatively impact on their business and reasons for this focus upon the difficulties in planning and arranging suitable cover for the extended training periods or deployments, whereas 43 per cent claim there will be no impact.

Payments to employers of members of the reserve forces

Given the potential disruption to a business if a member of staff is called out, financial incentives are important to businesses looking to take on a member of the reserve forces with 39 per cent citing this. We welcome proposals in the legislation to compensate employers a maximum of £500 per month and note that this should cover some of the cost of replacing an employee who has been mobilised. Whether £500 will be sufficient remains to be seen.

Other factors that have an impact on a business’s ability to plan for the future are also extremely important to members and so we would ask that in addition to payment for employers, employers are also given help in finding replacement staff (30 per cent consider this important) and that training schedules are flexible (considered by 21 per cent a key incentive). In addition approximately half of members have asked for two to three months notice if one of their staff is going to be deployed. The commitment to making deployment more predictable, giving employers more notice and telling them about training should help small firms plan cover for the employee that will be away. There is no doubt that for the smallest businesses this will be a challenge.

FSB members are also particularly keen on any Government support specifically targeting the needs of small and micro businesses rather than big business and it is clear for example that awareness of MoD employer awareness events is very low and that this could be improved. It is striking that we have such a low level of engagement between small businesses and our forces today, as evidenced by nearly nine in ten, (89 per cent) of members, stating they had never heard of the awareness events that are held around the country from time to time. The FSB is happy to offer to help the MoD to publicise these events to our member firms, across the country via our national and local social media channels and weekly e- newsletter.

Unfair dismissal of reserve forces: no qualifying period of employment

Employment regulations often pose a challenge for small and micro businesses that naturally have a less formal approach to running their business since they lack the resources of a larger counter-part. Small and micro businesses are generally amongst the best employers and in general employees are happiest working for smaller firms. However, small and micro businesses can also be put off from taking on staff if it will be overly burdensome for them. Views on whether small and micro businesses would consider employing a member of the reserve forces were positive with almost 40 per cent of small businesses saying they would consider employing a Reservist in the future and 7 per cent stating that they currently or have previously employed a Reservist.

Even though we see the rationale to consider legislating in order that unfair dismissal qualifying periods of employment should not apply if the dismissal is connected with the employees membership of the reserve forces, we would not want to see further changes to employment regulation in relation to reserve forces as this could add to a business’s uncertainty about taking on a member of the reserve forces.

An overwhelming majority of 95 per cent of businesses surveyed said that potential employees should always be clear and upfront and inform the business if they are Reservists, so that they can be supported.

The Employers Charter that is now in place should make a positive contribution.

Further support for businesses employing a member of the reserve forces

The FSB believes the Defence Reform Bill could go further in introducing measures to encourage small and micro businesses to employ a member of the reserve forces, and indeed regular members of the Armed Forces when they have completed their service.

Undoubtedly members of the reserve forces have strong skill sets which will be useful to a diverse range of businesses. Given this, the FSB suggests that in certain sectors where particular skills are essential, there is a ‘central pool’ of labour that could fill vacancies for any employer. Secondly there could be a far better way of ‘matching’ regulars (and possibly those Reservists) who wanted to find a job, with employers who had vacancies – in essence an MoD-led ‘matching service’ which could operate online but also at Job Centre Plus branches, Armed Forces Recruitment centres, and Territorial Army (TA) centres.

Further issues for clarification

There are also some fairly fundamental questions around detailed support – in particular when a Reservist returns to their civilian role, and any apparent medical condition becomes apparent at a later date. This will inevitably lead to questions around liability, issues over sickness absence and possibly finding another replacement to cover what in essence is not a further deployment, but a further absence of their employee for a longer period than anticipated. It raises important questions under current employment legislation.

Concerns have also been voiced if TA centres are to be amalgamated as the large majority of Reservists engage because their TA centres are local, and they have colleagues or friends serving as well. If extended travelling which is remote from where they live is to happen either to their local centre, or to training grounds, then this could raise further issues. The extension of training though from 35-40 days unless a business operated shift patterns over the weekends, should not cause the majority of employers any problem.

Finally, although the accredited military training that Reservists will receive should help develop highly valued skills that can be easily transferred to their civilian roles, the accreditation process will need to be understood and meaningful to employers. At the moment, businesses do not know what Reservists will be accredited to and what areas the training will be in.

Conclusion

Although there is appetite amongst small businesses to employ members of the reserve forces it is clear that without government aids small businesses find employing a Reservist an administrative, financial and resourcing challenge. This coupled with the fact that many small businesses are of the view proposed changes will have a negative impact on their business means that Government support to specifically target small and micro businesses would be welcome. Financial incentives are the preferred means of encouraging small businesses to employ Reservists, but other measures such as help with finding replacement staff and adequate notice of when staff would be mobilised would also be useful. It is also extremely important to small businesses that potential employees tell them if they are members of the reserve forces. Finally, it is clear through our survey work that more should be done to engage small and micro businesses with MoD employer awareness events.

September 2013