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New research from global insurer Zurich shows that over two thirds (70%) of British SME decision makers want the government to focus on cutting red tape. This ranks more highly than improving access to finance (54%) and reviewing employment legislation (36%) in the list of top three SME priorities.

This desire for cutting red tape rises to 76% amongst SMEs in the North of England and 74% in the Midlands. In London this figure is 60%, which while below average, still ranks as their top priority. Manufacturing SMEs put the greatest emphasis on the reduction of red tape (86%) with construction (75%) and financial services (67%) companies closely following.

When senior SME decision makers were asked to rank their top three regulatory challenges, employment regulations topped the list (37%), followed by health and safety (28%) and pensions (21%). The concern with employment regulations is also reiterated by the fact almost one in five (17%) small businesses view employment tribunals and legal proceedings as a top business threat.

Employment tribunal changes have come into effect from Friday 6th April as part of the Government's employment law reform measures.

There were 218,000 tribunal claims in 2010-11, a rise of 44% since 2008-09, with each business spending nearly £4,000 per claim on average defending itself. There is an additional average cost of a £1,900 to the taxpayer per claim.

The changes mean that from 6th April:

  • The qualifying period for claiming unfair dismissal will rise from one to two years.
  • Judges will be able to sit alone in unfair dismissal cases.
  • Witness statements can be provided in writing as opposed to the current rules where a witness reads their own statement out aloud.
  • The maximum level for costs awarded to businesses winning a vexatious tribunal claim will rise from £10,000 to £20,000. Deposit orders required by claimants when a judge determines that a part of claim is unmerited will increase from £500 to £1,000.


The Government has also announced its intention to publish the average value of awards and time taken to reach a hearing. Included in the guidance for tribunal application and response forms, this information will provide all parties with a greater understanding about what to expect from the tribunal process before they enter the system.

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