Employment law needs to back small businesses

The UK’s small business sector needs to be nurtured if it is to be considered a major contributing factor in rebalancing the economy, it has been claimed.

According to a ‘Think Small First’ report by the Confederation of British Industry (CBI), small businesses create two-thirds of all new jobs but hefty regulations are holding them back.

The report highlighted the potential for small businesses to pick up the employment slack from the public sector but 60% of private and family-owned liability insurance holders feel that employment regulation stands as a barrier to job creation and stifles opportunities for growth.

The aim of the report is to push Government to recognise the impact that some regulation has on the small businesses of the UK.

It is believed that speeding up tribunal systems, introducing the right to an annual review of flexible working and to agree a return date with an employee going on maternity leave will provide small businesses with the much needed support.

John Cridland, CBI Director-General, said:

“Smaller firms are job-creation dynamos. The Government must think small first by tackling regulation which distracts them from growing the business and creating jobs.”

“Much employment law fails to recognise that private and family-run firms don’t have dedicated human resource teams and tend to manage staff in an informal way.”

“If the Government gets the law right for small firms, it gets it right for all firms. Thinking small first would better harness the potential of SMEs, rather than simply exempting some of the smallest from aspects of the law that undermine growth.”

Liability insurance holders in the small business sector employ a total of 13.6 million people. Considering the findings that smaller businesses grow at a faster rate than larger firms the Government must do what it can to facilitate.