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Small firms 'will still struggle with burden of EU red tape'

Posted: 31st May 2011   In: Corporate Commercial, Business Employment

The moratorium on new employment laws for small firms has now come into effect but business groups say that EU regulations will remain a major burden.

The moratorium was announced in the Budget and covers start-up businesses and small firms with fewer than 10 employees.

HMRC is defining a start-up firm as a business that began trading after 6th April this year.

The moratorium lasts for three years and applies to all new domestic regulations coming into effect after 1st April this year. However, much of the employment affecting the UK comes from the EU and this is not included in the moratorium.

The Federation of Small Businesses (FSB) says this means that small firms will still be overburdened with red tape from Brussels. They will still have to deal with new regulations including the Agency Workers Directive, Parental Leave Directive and the Pregnant Workers Directive.

John Walker, FSB National Chairman, said: “The FSB has welcomed the Government's commitment to help ease the burden of regulation on these businesses, but we are concerned that regulations coming in from Europe will hit small firms harder. It is disappointing that some of the most burdensome aspects of employment regulation are not included."

The Institute of Directors says the Government should make the moratorium permanent, “otherwise there is a danger that when the three-year exemption expires, micro firms will be hit by a wall of regulation.”

It means small firms will still need to keep up with changes in regulations over the next three years so they are able to comply when the moratorium ends.

Please contact us if you would like more information about the issues raised in this article.