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Impact on Small Businesses of Lowering the DDA Part II Threshold

Meager N, Bates P, Eccles J, Harper H, McGeer P, Tackey N D, Willison R
DRC/POL/01/3, Disability Rights Commission, April 2001

a Disability Rights Commission Research Brief

Download the full report from the DRC website (pdf file).

This Brief presents findings from a study conducted by the Institute for Employment Studies in partnership with MORI on behalf of the Disability Rights Commission (DRC). The main objectives of the research were:

• to map the policies and practices of small businesses in relation to recruiting and employing disabled people
   
• to explore small businesses’ awareness of, and views on the DDA, including their views on a further reduction in the employer threshold for Part II of the Act. (At the time of the research, employers with fewer than 15 employees were exempt from the employment provisions in Part II of the DDA. This threshold had been lowered from 20 employees in December 1998.)
   
• to assess small businesses’ needs for information, advice and support on the employment of disabled people.

The research consisted of two elements:

• a telephone survey of a representative national sample of 1,005 small employers spread across three size categories: those with 1-14 employees (exempt from Part II of the DDA); those with 15-19 employees (covered by Part II since December 1998); and those with 20-49 employees (covered by Part II since the inception of the DDA).
   
• in-depth case studies of a further 45 small employers, in five local areas (two in England, one in Scotland, one in Wales and one in Northern Ireland).

Key findings from the study are set out below.

Characteristics of small employers

Employers in these size categories are dominated by service sector organisations (especially retail, catering and similar). Levels of recruitment activity among firms in the sample varied from an average of less than two recruits a year among the smallest firms (1-4 employees) to six recruits a year among the largest (20-49 employees). Most firms of this size do not have a distinct personnel/HR manager or department. Most do not have a formal written equal opportunities (EO) policy, although most of those that do address ‘disability’. Public sector employers are most likely to have formal EO policies, and most likely to have an explicit policy on the employment of disabled people.

Recruitment and employment of disabled people

Only 12 per cent of the smallest firms (1-14 employees) initially claimed to have disabled employees. This rose to 28 per cent when we also included employees who are disabled according to a broader definition, as used by the DDA. The corresponding proportions among the largest firms (20-49 employees) were 31 per cent and 53 per cent respectively. Around a quarter of firms with no disabled employees have had them in the past, but more than a half of small employers have never (knowingly) employed a disabled person. Businesses with higher levels of recruitment activity are more likely to have disabled employees; as are businesses with equal opportunities policies.

The largest group of disabled employees is found in relatively unskilled, routine occupations, but there are also significant numbers to be found in higher level (including managerial) jobs.

The most common reason given for not having disabled employees is that no disabled people have applied for work in the business (72 per cent of firms who have never had disabled employees say this).

Word-of-mouth recruitment is the most common method of recruiting among the smallest firms, although press advertising is more important among the larger firms.

Only six per cent of the firms actively encourage job applications from disabled people (the proportion is higher in the public sector), although hardly any say that they would not consider recruiting a disabled person. There is, however, no evidence that those with a policy to encourage disabled applicants are more likely to have disabled employees in practice.

Adjustments made for disabled recruits or employees

Between half and two-thirds of the firms (depending on their size) who have (or have had) disabled employees said that they have had disabled employees for whom they did not need to make adjustments or provide additional support.

Fewer than ten per cent of firms with disabled employees (now or in the past) have made adjustments to recruit a disabled person. The proportion making adjustments to retain an existing employee who became disabled is higher (at between 20 and 30 per cent, depending on the size of firm). The most common adjustments made relate to changes to working patterns or hours, or adaptations to the organisation of work, and four-fifths of firms that have made adjustments have found it easy or very easy to do so.

Only one-third of those making adjustments say that they incurred any direct financial cost in doing so. The average cost of adjustments in the last year, per employee for whom adjustments with a financial cost were made, was £772. However, if we also take account of the facts that most adjustments did not incur a financial cost, and that most firms with disabled employees did not make adjustments at all, the average cost of adjustment, per disabled employee, falls to £184 over the last year.

Less than half of those who have made adjustments identified any indirect costs in doing so (management time, etc.).

Only one-fifth of those making adjustments have drawn on help (mainly non-financial in nature) from outside the firm, but most of those that have, regard the assistance received as important or very important in enabling them to recruit or retain disabled employees.

Benefits of employing disabled people

Only a minority of the firms (15 per cent overall) saw any business benefits from recruiting disabled people, although the proportions reporting benefits were higher in the public sector, and the south east region, and among those with disabled employees (now or in the past). The most common benefits identified relate to impacts on staff relations and morale, the skills of disabled people, and the external image of the business.

A higher proportion of firms (31 per cent), however, identified business benefits from retaining existing employees who became disabled.

The employment provisions of the DDA

Nearly two-thirds of the businesses had heard of the DDA prior to the survey, although fewer than half of these were aware of the detail of the employment provisions. Awareness was higher among those with disabled employees, and those with positive attitudes to recruiting disabled people.

Nearly three-quarters of businesses were unsure whether they were covered by the employment provisions, and many of those who thought they knew got it wrong. Only a small minority identified employment size as a reason for being covered or exempt.

The majority of firms (82 per cent) had not reviewed or revised any of their policies or practices affecting the employment of disabled people, since the introduction of the Act, and most of those who had made changes did not attribute them to the Act.

Hardly any businesses surveyed expressed negative attitudes to the DDA, with two-thirds saying they are in favour of the Act, and the remaining third neither in favour nor against it.

Over half of the employers claimed to have heard of the DRC before the survey.

Just over half of currently exempt employers think that lowering the threshold would have no impact on them (mainly because they believe they do not discriminate against disabled people), and only one in five believe it would have a significant impact on them (the largest group of whom believe it will lead to additional costs in adjusting the physical working environment).

Just over a quarter of the firms (with 15-19 employees) who came into scope of the employment provisions in December 1998 were aware of that fact. Of those aware of coming into scope, virtually none had changed policy or practices as a result, and all said that coming into scope had no impact on their business (the most common reason given for this was that disabled people do not apply for employment in their business).

Similarly, the vast majority (over 90 per cent) of the firms (with 20-49 employees) in scope of the employment provisions since they were introduced in December 1996 say that the Act has had no impact on their business.

Part III of the DDA (goods, facilities and services)

Over half of the small firms surveyed are covered by Part III of the DDA, but only half of these had any substantial awareness of the Part III provisions, and a significant proportion (close to one-fifth) were not aware that they were in scope.

Nearly 40 per cent of those in scope, and aware of that fact, had made changes in provision for their disabled customers, and a significant minority of these (one in five) believed that these changes also benefited disabled employees.

Information, advice and support

Only a minority (12 per cent) had made use of external information or advice, or sought support about employing disabled people. Where such support had been sought, it most commonly related to information about the business’s obligations under the DDA, and to support in making adjustments to employ a disabled person. The most common sources of external help are written information (leaflets, etc.) and the various Employment Service resources.

One-third of businesses in scope of Part II anticipate future support or information needs (especially regarding their obligations under the DDA). There is a general preference for traditional written media (leaflets, etc.) in delivering such information, followed by internet-delivered information and telephone helplines.

Nearly 80 per cent of currently exempt employers believe they would need some information, advice or support if the threshold were removed. Again, the main area of help relates to their obligations under the Act, and the preferred formats are dominated by written materials, followed by telephone helplines and the Internet.

Future developments

Only seven per cent of currently exempt employers have any plans to make changes to improve access to disabled employees or to make it easier to recruit or retain disabled staff.

Some conclusions

The study shows that despite a high level of claimed awareness of the DDA, small employers have only a sketchy understanding of the Act’s provisions, and the obligations they place on employers. Most of them are not even sure whether or not they are covered, and many of those who think they know, get it wrong. Despite this, the vast majority, when the Act is explained to them, are in favour of the Act or, at worst, neutral about it.

In line with the low levels of awareness, hardly any small firms have changed policies and practices as a result of the Act, and most of those covered by the employment provisions since the DDA’s inception say they have had no impact on their business. Most of those firms which came into scope of the employment provisions in 1998 are not aware of having done so, and none of them have seen any impact of the Act on their business. It is notable that the actual impact on those covered is much less than the impact which currently exempt firms anticipate.

It should be stressed, however, that a key reason for the apparently low impact of the DDA is that so few firms are aware of its obligations or, if aware, have taken no steps to comply (typically because they believe they do not discriminate, or that the Act is not ‘relevant’ to them because disabled people do not apply to work in their business).

Where anxieties were expressed about the costs of compliance, these typically related to the costs of physical adjustments. These anxieties were not borne out, however, by the experience of those small firms who had disabled employees already, over half of whom pointed out that they had disabled employees for whom no adjustments whatsoever were necessary. Where adjustments were made moreover, they commonly related to changes in working hours or arrangements, and most cost the employer nothing.

Finally, it is worth noting that the study revealed a significant and widespread need among small employers for better information, advice and support on the Act and on the implications for employers of employing disabled people.

Download the full text of the report (599kb, pdf document).

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Impact on Small Businesses of Lowering the DDA Part II Threshold, Meager N, Bates P, Eccles J, Harper H, McGeer P, Tackey N D, Willison R. DRC/POL/01/3, Disability Rights Commission, 2001.
ISBN: 978-1-85184-999-4. PDF Download only: £free

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