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Call to ease employment regulations

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The government needs to review the burden imposed on employers by employment rules and regulations in order to tackle unemployment and to make sure the jobs market grows once the downturn is over.

The call came from the Forum of Private Business (FPB), which said that small firms in particular require a long-term plan to resolve the problems that employment laws create.

Phil Orford, the FPB’s chief executive, said: “In order to stimulate employment, which would allow small businesses to grow and help to stabilise the economy, they need more than the Prime Minister’s £2,500 ‘golden hellos’ for taking on people who have been unemployed for more than six months.

“They require a long-term plan to address all of the difficulties small businesses face in relation to employment, including a significant reduction in employment regulations.”

Mr Orford argued that reducing employers’ National Insurance, for example, would incentivise firms to hold on to existing staff.

Research carried out by the FPB before Christmas showed that more than 90 per cent of the business group’s members who were surveyed are concerned that employment regulation has increased over the past year. Some 86 per cent said they expected it to increase again over the next 12 months.

That includes, the FPB said, new regulations such as the Agency Workers Directive, which gives temporary workers the same pay and holiday entitlements as permanent employees after 12 weeks with a company and which will apply from 2011.

The FPB aded that redundancy and unfair dismissal payments are being increased from 1 February.

The key figures will see the maximum amount of a week’s pay for calculating statutory redundancy pay and the basic award rising from £330 to £350; the maximum statutory redundancy payment or basic award will increase from £9,900 to £10,500; and the maximum compensatory award which can be made for unfair dismissal will climb from £63,000 to £66,000.