A Downing Street report recommends delaying the application of new pensions laws to small firms. Image courtesy of: nuttakit/freedigitalphotos.net
Smaller companies should not be forced to provide pensions to employees, according to a Downing Street report, parts of which were recently obtained by the Daily Telegraph
New laws to be introduced in 2012 for larger companies and later extended for SMEs would require all employers to set up pensions schemes and make mandatory contributions for all employees.
But a report commissioned by David Cameron recommends that the introduction of this law should be delayed for small companies, who will end up paying a substantial part of the estimated £3bn cost of compliance.
The recommendation is one of several “exemptions for small businesses” and was made by Adrian Beecroft
, a venture capitalist, who drew up the report for Number 10.
The Daily Telegraph also disclosed that the report’s key recommendation is for unfair dismissal laws to be scrapped, which would allow companies to dismiss employees without having to provide a satisfactory explanation.
This recommendation has not gone over well with a number of parties including the Liberal Democrats and trade unions.
Norman Lamb, Nick Clegg’s parliamentary adviser, said: “I think it would be madness to throw away all employment protection in the way that’s proposed and it could be very damaging to consumer confidence.
“What we are talking about here is every single employee in the land being in a position where their employer could arbitrarily terminate their employment.”
However, the proposal was praised by business groups and entrepreneurs including Lord Sugar, host of BBC show The Apprentice
Senior advisers at Downing Street, along with George Osborne, the chancellor, would like to see the unfair dismissal laws reformed. But opinions over delaying compulsory pensions are less clear – Work and Pensions Secretary Iain Duncan Smith has said the measure is essential if the country is to avoid a retirement crisis.
In total, the Beecroft report contains 20 recommendations, the majority of which are expected to focus on reducing the administrative burden on small employees.