Proposed employment laws will add to business costs

A range of new employment laws that are due to be introduced over the next few years could cost UK businesses as much as £22.87 billion, the British Chambers of Commerce (BCC) has claimed.

Although the Government has promised to tackle the growing administrative problems of red tape and regulation compliance, the BCC said that the increasing number of rules is stifling job creation and growth.

According to the BCC report, seven major changes are planned for 2011 alone.

Amongst other measures, the BCC identified giving the right to request time off to train (2011) as likely to cost UK businesses £174.9 million per year; the Agency Workers Directive (2011) will have a recurring annual cost of £1.54 billion; while the pension reforms set for 2012 will add £4.52 billion each year to overall business costs.

The figures were arrived at by the BCC after taking into account both the one-off costs of the introduction of a new rule and the ongoing annual financial burden imposed by each.

The BCC pointed to Government tinkering with employment law as a further problem. Plans to introduce three changes to parental leave in the next four years was cited as an example. Every change, however small, will come at a price to business, the BCC argued, making it essential for the Government to get the legislation right first time to avoid confusion and unnecessary costs.

David Frost, the director general of the BCC, said: "The Government claims business growth is top of the agenda, yet UK firms will be hit with huge costs once these new regulations come into force. Companies cannot generate growth and create jobs when they are facing a £23 billion bill, just to implement new employment legislation. Unless the Government reduces this kind of red tape, we will continue to have high levels of unemployment and could end up derailing the recovery.

"These new regulations, such as changes to the right to request flexible working, paternity leave, and the abolition of the default retirement age, will leave employers confused, and distract them from growing their business."

Mr Frost added that he wanted to see the Government use the upcoming Budget to act on its promises and deliver concrete reductions to the regulatory burden faced by the private sector.

A spokesman for the Department for Business responded: "The Government is taking dramatic steps to reduce the burdens that regulation places on our businesses, removing barriers to growth.

"We are removing or delaying unnecessary measures wherever possible and have introduced the revolutionary one in, one out system that will cut the costs that businesses face in dealing with bureaucracy."