Small business owners are being urged to make preparations now for new laws that will come into force from 1st October.

As part of a new government strategy to introduce legislation twice a year, three major initiatives that will affect small businesses will become law, warns John Davies, head of law at ACCA (the Association of Chartered Certified Accountants).

“October 1st represents the second key date of 2007 for new business legislation, under the government’s relatively new system of storing up new workplace measures for release just twice a year,” he said.

Of most concern to small company bosses will be another rise in the level of the minimum wage, which will increase to £5.52 an hour for workers aged over 22. Those aged between 18 and 21 will be entitled to a minimum of £4.60 while 16-17-year-olds will receive at least £3.40 an hour.

October also marks the start of a phased introduction of the new holiday ruling, which will eventually see every employee in the UK entitled to a minimum of 28 days’ annual leave a year. This is designed to end the practice used by some companies – particularly in the entertainment and service industries – of counting the eight Bank Holidays every year as part of the current minimum entitlement of 20 days. Staff will eventually be entitled to a minimum of 20 days plus the eight Bank Holidays.

From October 1st, the statutory minimum leave entitlement will increase from 20 days to 24, before rising further to 28 days in April 2009. Companies will still be able to offer payment in lieu of the additional holiday entitlements but only up to April 2009. The new regulations will be extended to part-time workers on a pro-rata basis.

Small business owners will also be affected by elements of the new Companies Act that will come into force in October 2007. These include new statutory rules on the responsibilities of company directors which will have important implications for directors of companies of all shapes and sizes, says Davies.

“The new act takes the most important common law principles and sets them down in legislation,” he says. “The intention is to make the law more accessible to non-experts and in the process save companies the expense of buying in specialist advice from outside.

“The main common law-derived duties now set out in legislation include the fact that directors must respect the terms of their company’s constitution and act within their powers, they must avoid conflicts of interest and should not accept benefits from third parties,” he added.