Employment law could be relaxed

DAVID CAMERON is considering making it much harder for employees to bring unfair dismissal cases, Downing Street sources said yesterday.

The Prime Minister could soon announce plans to double to two years the amount of time that a member of staff must be employed before they can claim unfair dismissal.

Currently, any worker who has been with a firm for 12 months or longer can take their company to an employment tribunal if they feel they have been sacked without good reason.

A Downing Street spokesman refused to confirm that the specific proposals were under consideration, but said “all aspects of employment law are being looked at”.

Alistair Tebbit, spokesman for the Institute of Directors, said this was the first sign that the government was beginning to take “excessive employment law” seriously but cautioned it was “not enough”.

He added: “To date all we’ve heard from the coalition on this subject are new employment restrictions, mainly stemming from more parental rights, abolition of the default retirement age, new flexible working rights and a gold-plated EU agency workers directive.

“This proposal would only offset in part the damage caused by these new regulations.”

Meanwhile, Cameron will today announce a wide-ranging review into the government’s “institutional bias” against small and medium sized businesses.

Lord Young, the special adviser who helped Sir Keith Joseph usher in privatisation in 1979, has been appointed as the Prime Minister’s enterprise tsar, tasked with writing a “brutally honest report” that “forensically examines how government departments interact with and affect small businesses”.

“Today, government is institutionally biased against small businesses and enterprise. Despite warm words from ministers and governments of all parties, the obstacles and burdens facing small businesses have multiplied over the years,” Cameron wrote in a letter to Young yesterday.

Young has been asked to make recommendations on how the number of public sector contracts awarded to SMEs can be boosted, after the coalition said it wanted to give 25 per cent of government contracts to smaller firms.

“I am particularly concerned about the shocking way in which small and medium sized firms are locked out of procurement opportunities by central and local government, and the rest of the public sector – for example the NHS,” Cameron wrote to Young.

Young will also report on how the government can cut red tape; improve the flow of credit to small firms; and create a better dialogue between the coalition and SMEs.

And the former trade and industry secretary will be asked to offer ways of making it easier for individuals to set up their own firms.

Stephen Alambritis, spokesman for the Federation of Small Businesses, gave a cautious welcome to the announcement but pointed out the coalition had waved through a raft of anti-small business legislation since taking power.

He said plans to auto-enrol all employees in a pension scheme from 2012 would cost small businesses dearly, as would the right to request flexible working.

He added: “Government has been partial over the years to listening to large business, not small business.”