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New employment rules worry businesses

New regulations scrapping the default retirement age and extending paternity leave could harm businesses, a new survey has claimed.

The survey, carried out by the British Chambers of Commerce (BCC), found that the new rules, which come into effect at the beginning of April, are of concern to many of those firms polled.

Of the 1,300 businesses questioned as to the impact of the regulations, over half (52 per cent) said that they expected additional paternity leave requirements to be detrimental to their businesses, with over a third (34 per cent) claiming they would be extremely detrimental.

When asked about the abolition of the default retirement age, a fifth (21 per cent) considered it would have a negative impact.

Under the paternity leave changes, which also cover adoption, new fathers gain the right to additional paternity leave and pay (APL&P) if their partner gives birth on or after 3 April 2011.

Additional paternity leave (APL) means a father can take up to 26 weeks' leave to care for the child.

Parents have the option of dividing maternity leave between them. Fathers have the legal right to take up the final three months of paid maternity leave due the mother provided she returns to work. They will be paid the statutory maternity pay per week for the three-month period.

They will also have the chance to take a further three months of unpaid leave, bringing the total amount of parental time-off for couples of newborn children to 12 months.

Fathers can only start their APL 20 or more weeks after the child's birth, and once their partner has returned to work from statutory maternity leave or ended their entitlement to statutory maternity pay, or maternity allowance.

The employee's APL will have to have ended by the end of the 52nd week after the child's birth. The father only receives additional statutory paternity pay (ASPP) during the time their partner would have been receiving statutory maternity or maternity allowance.

To qualify, the father must have been on a continuous contract with his employer for at least 26 weeks by the end of the 15th week before the baby is due.

The scrapping of the default retirement age of 65 means that employees can no longer be obliged to leave their jobs simply because they have reached 65 in the case of men and 60 in the case of women.

The BCC pointed out that these two major reforms to employment legislation will not be subject to the three-year exemption from new domestic rules announced in the Budget for micro-firms (those employing fewer than 10 staff).

David Frost, the BCC's director general, said: "In the face of promises by the Government to listen to the needs of business and cut red tape, these two new pieces of employment regulation will hit businesses hard. The Budget revealed a policy to exempt start-ups and existing firms with fewer than ten employees from new domestic regulation. But this week's changes show there is an urgent need to review and scale back policies already on the statute books. 

"The Government must go a step further and show all businesses that it is serious about deregulation. Arguably, any exemptions should include a wider scope of firms, not just micros.

"Our survey results show that employment law changes are causing great concern among employers, who, instead of concentrating on running their business, have to cope with more and more shifts in employment law. Every change, no matter how small, costs employers time and money. Unless practical steps are taken to help free businesses from red tape, the burden on employers will only increase, and barriers to job creation and economic growth will remain."