Cuts to red tape will 'boost business', says Government

Small and medium sized businesses are most likely to benefit from new steps to reduce business regulations, according to the Government.

The package of new measures, which includes simplified processes to speed up the termination of employment, will give 'firms greater flexibility and confidence in managing employees' and benefit employers and employees, it said.

The parliament long review of employment law, including the Red Tape Challenge, is aiming to abolish unnecessary and complex red tape regulations which the Government said has 'damaged flexibility, created perverse incentives, increased business risk and unnecessary administration.'

Making the announcement, Business secretary Vince Cable said the Government 'have been looking across the range of employment laws with a view to making it easier for firms to hire staff while protecting basic labour rights.'

It has given proposals for various changes to employment regulations, including:

  • Support for an extension of settlement agreements, which would make it easier for firms to dismiss under-performing workers and minimise the number of costly and time-consuming employment tribunal cases. A consultation is now open with the Advisory, Conciliation and Arbitration Service (ACAS) agreeing to provide an appropriate code of practice
  • A cap on the compensation awarded for unfair dismissal claims
  • Proposals to streamline employment tribunals through greater power to dismiss 'weak' cases
  • Call for evidence on the efficiency of TUPE rules - designed to protect workers when a business is taken over by another owner
  • Recommendations on improving guidance for SMEs on the ACAS code of practice on discipline and grievances. 

According to a Government press release, the Organisation for Economic Co-operation and Development (OECD) ranks the UK's flexible labour market as one of the best in the world - although Vince Cable acknowledged that more could be done to help small businesses.

New and amended business regulations typically come into effect in April and October each year, with next month's biggest shake-ups including auto-enrolment of eligible workers into a workplace pension scheme and changes to business audits and annual accounts.