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Government urged to act on employment law burden

Ministers are being urged to do more to ease the regulatory burden on micro firms after some business groups criticised the Government’s moratorium on employment law.

The Federation of Small Businesses (FSB) argues that the Government should tackle the flow of EU regulations, as well as domestic rules, to make real progress on reducing red tape for UK firms.

‘The Government has talked a good game on deregulation. But small firms are still waiting to see action on the ground that matches the rhetoric,’ commented John Walker, chairman of the FSB. ‘Firms have still had to get to grips with big changes in employment law and the moratorium for micro-firms is still to take effect.’

His comments come after the Institute of Directors (IoD) branded the moratorium on new employment law as ‘a gimmick’.

Introduced in last year’s Budget, the scheme provides micro firms (those employing fewer than 10 staff) with a three year exemption from new employment laws.

However, the IoD claims that micro firms were not exempt from a single regulation in 2011 and it does not expect the moratorium to make a significant difference this year either.

‘It's the Emperor's New Clothes. The moratorium exists but it hasn't been applied to anything. Unless it is applied to something it is meaningless,’ said Alexander Ehmann, head of regulatory affairs at the IoD.

To make a real impact, the IoD suggests that the Government could retrospectively apply the rule to the swathes of regulation that came into force in 2011, such as the removal of the default retirement age and the changes to paternity leave.

Commenting, a Department for Business spokesman said: ‘We are confident that there will be no significant new burdens on micro businesses as a result of measures introduced between July and December 2011.’