Navigating a mass of employment law is a major problem for the UK’s smallest firms, with nearly half having faced difficulties working with the legislation, according to new research from the British Chambers of Commerce (BCC).

The findings are released the day before the controversial Single Equalities Bill is published by Equalities Minister, Harriet Harman, which includes the requirement for all firms with more the 250 staff to take part in gender pay audits.

The BCC’s workforce survey, which questioned 3,400 businesses, also highlights the importance of migrant workers to British firms. Around a quarter of businesses employ migrant labour because of a shortage in suitable local candidates with the required skills, experience and work ethic.

Some of the key findings in the report include:

Employment law is a major problem for small firms, with 47% having faced difficulties navigating the legislation.

Around a quarter of businesses employ migrant labour because of a shortage in suitable local candidates with the requisite skills, experience and work ethic.

Half of the UK’s businesses have not recruited in the last six months, while 24% are not planning to fill positions that become vacant when an employee leaves.

An overwhelming majority (84%) of flexible working requests are granted by employers.

Only 28% of businesses are using JobCentre Plus, with this figure falling to 14% for firms with less than 5 employees.

Commenting, David Frost, Director General of the British Chambers of Commerce, said:

“This downturn has largely allied the interests of employers and employees. Employers want to retain their skilled and experienced staff, while employees want to remain in work and are often prepared to take pay cuts and freezes to do so.

“More help is needed to support Britain’s hard-pressed businesses so that they can drive our economy out of recession, creating jobs and wealth in the process.

In a keynote address to be delivered at the BCC’s Annual Business Convention in Birmingham tomorrow, David Frost will challenge government ministers with the findings. In his speech, he will argue for a moratorium on employment law:

“Too often the government sees the answer to a problem as being more legislation. Not least in the area of employment law. The result of this will mean that it will take longer to get out of recession and companies will be loathe to take on more employees.

“If we are really serious about helping businesses, about creating jobs, why not have a complete moratorium on new employment legislation for the next three years?”