Health and Safety

Image: Some of the treatments use chemicals - the business must ensure that these chemicals are safe for those who use them.

There are certain rules that they have to conform to in relation to health and safety. The business uses various chemicals in the type of work they do and they have to ensure that these chemicals are secure and safe and that those who use them are adequately protected.

As the business employs more than 5 staff, they have to submit a health and safety statement. This includes a risk assessment of the use of the chemicals in the business, electrical supplies and the use of electrical equipment. The risk assessment must identify the likely risks (what could go wrong), how the business will deal with those problems and what measures are being taken to reduce the risk.

Staff must be trained in these measures and there must be medical facilities and a first aider available. Training people in first aid can be expensive - a 4-day course offered by Myosotis can cost anything between £900 and £1200 per person. The business receives regular visits from the Health and Safety Executive (HSE) who check their HSE policies and provision.

Jilly also has to take out public liability insurance to cover the business for any liability it has for clients or visitors being injured in some way whilst on the premises.

Minimum Wage

The business is also affected by minimum wage legislation, which has just risen (October 1st 2004) from £4.50 per hour for those over 22 to £4.85 per hour. Some trade unions are calling for a minimum wage of £6 per hour by the end of 2006.

For the average 40-hour week, this can add an extra £14 per week to basic pay (£728 per year) and could add an extra £5,824 per year to the wage bill if all 8 staff were on the minimum wage. In addition to this, the business will have to make additional National Insurance Contributions, which are based on a proportion of an employee's earnings. These rates are currently between 9.3% and 12.8% depending on the level of earnings and the type of scheme involved. For an average member of staff on the national minimum wage the total cost could be an additional £800 per year.

Disability and Discrimination Act

Other external factors include the changes in the legislation relating to discrimination and disability - the Disability and Discrimination Act 1995 (with revised regulations in 2004). This type of legislation could cause major problems for a small business. One element of the legislation is that every business must take reasonable steps to ensure that disabled people can gain access to the services of a business. For No. 31 Hair and Beauty this proves a problem because the premises they use is classed as a listed building and as such there are limitations as to how far they can change the structure of the building.

In addition, Paul pointed out that the cost to the business of making alterations to meet the legislation could be excessive. It could, for example, cost £20,000 to create suitable access for a wheelchair user but they may not get any wheelchair users wishing to use the facilities and as such the cost would far outweigh the revenue streams that could be generated as a result - even if they were able to get permission from the local planning authorities to be able to change it in the first place!

The key word in the legislation therefore is 'reasonable steps' - provided the business can prove that they have done this they are covered. The definition of 'reasonable' has not yet been clarified and it may take a test case in law to set out the boundaries of what is reasonable and what is not.

Image: Meeting the requirements of the legislation could mean adding a slope for wheelchair users and even widening the exisiting entrance.

Complaints

One problem can arise in people making unsubstantiated claims. Any complaint must be investigated fully and this involves Jilly and often Paul (who also has his own business) setting aside time to deal with it. Whilst they are dealing with these issues they are not generating any revenue and it can be very frustrating when the complaint has no basis.

For example, someone - Jilly does not know who - complained to the Inland Revenue that No. 31 was not adhering to the minimum wage legislation. The Inland Revenue sent an investigator and it took most of the day to search out all the documentation, cheque stubs, payment records and so on, to be able to show that this was not the case.

On another occasion, someone complained to the local council about a health and safety issue in their old shop. It involved a pipe running across a window. Again, Jilly had to spend a great deal of time involved in the paper work associated with recording such an incident as well as time with the health and safety inspectors from the council; again no action was taken against the business.

Other health and safety issues arise with having to carry out self-assessed risk assessments of fire safety. There are published guidelines but the paper work that has to be completed can be time consuming. Such bureaucracy is one of the main complaints of many small businesses but in most cases a balance has to be drawn between protecting the public and allowing businesses to carry out their work. Businesses think that in some cases that balance tips too far against them!

Banking

The company are influenced by changes in interest rates. It has an overdraft and changes in interest rates are reflected in higher charges on its overdraft. It also finds that the cost of banking is high. It is charged 50p for each cheque it deposits and writes and in general, bank charges tend to be high for a small business.