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Small firms will still be hit hard by EU employment regulation says FSB

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The Federation of Small Businesses (FSB) is warning that micro firms will still be hard hit by the large number of regulations that come from Europe, as the moratorium on regulation begins.

The Government has put in place a moratorium for micro firms on all new domestic regulations for the next three years. But the FSB is concerned micro firms are going to be hit hard by new regulations that come from Europe - 72% of the total cost of UK regulation now originates from Brussels.

The overall cost of red tape to businesses in the EU is €124 billion a year and there have been more than 100,000 pages of new EU regulations since 1997. New regulations coming from Europe that will impact micro and small firms include:

• Agency Workers Directive

• Regulation of working time for self-employed lorry and coach drivers

• Parental Leave Directive

• Pregnant Workers Directive

• Capital Rights Directive 4

The FSB is calling on Government to push for stronger changes in the EU to ensure that this constant flow of extra burdens ceases. The FSB is urging MEPs and Commission Officials to 'think small first' and introduce a one in one out rule for all Commission proposals.

The FSB is also disappointed that the Government has decided to remove some large regulatory changes from the moratorium - including the extension to paternal leave and pay and the removal of the default retirement age - both of which impose a big burden on small businesses.

Research by the FSB shows that four in 10 small firms believe that a moratorium on new regulations would have a positive impact on their business, however more than a third of small firms do not feel that the budget will help to tear down the barriers of enterprise.

For the moratorium to truly work and to help small firms grow, small businesses need to have confidence that it will be put in place properly and that the regulations that impose the greatest burden to their business - employment regulation - will be included.

John Walker, national chairman, FSB, 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 and as a result they will feel the impact of these on their firm much more.

"If the burden of unnecessary regulation is lifted from small businesses, they would be free to get on with creating wealth, jobs and growth. It is worth remembering that if only 50% of the EU's small businesses employed just one extra person there would be an additional 10 million jobs.

"Micro firms will be in a much better position to plan for their future, grow, innovate and take on new staff, without the worry of constant changes to the law, yet it is disappointing that some of the most burdensome aspects of employment regulation are not included."