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Employment law: Moratorium for small businesses branded a 'gimmick'

The Government's plan to cut red tape for micro businesses has been branded a gimmick, after it was revealed that in the past year firms employing fewer than ten staff were not exempt from a single regulation. The claim was made by the head of regulatory affairs at the Institute of Directors, Alexander Ehmann.

"It's the Emperor's New Clothes. The moratorium exists, but it hasn't been applied to anything. Unless it is applied, it is meaningless," he said.

The Government introduced the scheme in April 2011, saying that it would relieve the burden of red tape on businesses employing fewer than ten people. The move was designed to try to boost innovation in the small business sector, which it was hoped would help carry the UK out of recession and into growth.

However, it now seems that the plans have not been implemented properly, and consequently are having little or no effect.

"The Government has talked a good game on deregulation (for small businesses), however firms are still waiting to see action on the ground that matches the rhetoric," said John Walker, Chairman of the Federation of Small Businesses.

"Firms still have to get to grips with major changes in employment law, and the moratorium for micro firms still has to take effect," he added.

Employers in the UK are subject to a double-whammy of legislation from both Westminster and Brussels. To fully understand the changes, many need expert legal advice and those who fail to invest in this area can find themselves exposed to litigation. Relieving the effect of both domestic and European law would be the only way to truly lighten the load.

"Ministers have good intentions but there is still a volume of law on the way in 2012," said Abigail Morris, policy adviser at the British Chamber of Commerce.

In response to the claims, a spokesman for the Department of Business Innovation and Skills said: "We are confident that there will be no significant new burdens on micro businesses as a result of legal measures introduced between July and December 2011."

Related links:

Read more on the story (The Telegraph)

Employment law for small businesses (FindLaw)

Find local employment solicitors throughout the UK (FindLaw)