Contractor accountants should be aware that the government is planning to overhaul the UK’s employment laws in order to help the economic recovery.

One of the proposals, which has already provoked fury, is to allow firms to fire employees who are underperforming during their first two years of employment, without the threat of facing an unfair dismissal tribunal. Under the current regulations, an employee can seek redress from an employment tribunal if they are sacked after 12 months.

The coalition is also looking into the system of tribunals at present. Business groups, such as the BCC are urging for immediate reform but the TUC suggested that workers could be discouraged from seeking justice if major changes are implemented.

Union leaders are also concerned that increasing the qualifying period to two years could give a green light to unscrupulous employers to break the law.

The coalition is likely to launch a consultation into the future of tribunals after business groups complained that there was a 56% increase in the number of cases in 2010.

One possible solution would be to charge claimants a deposit of up to £500 which would be refunded if the case was successful. But the TUC argues that this will deter low-paid workers from seeking justice.

Meanwhile, Vince Cable, the business secretary, has been asked to look into whether small businesses could be exempted from some employment regulations but any such changes could see the government in hot water from the EU.

David Cameron wants to see new jobs created this year in order to boost the economic recovery and whilst large companies have promised to do exactly that, smaller firms need more encouragement. Reforming the employment tribunal system and reducing the red tape for small businesses could go a long way towards providing it said David Frost from the BCC.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Talking Logistics by Gamma-Ray Productions

According to the results of a new survey by online accountants Sage, the UK tax system needs to be radically simplified.

This is the view of over 2,000 self employed contractors and small companies who took part in the survey in March 2010. Overall, the respondents felt that the rules governing PAYE, VAT and Corporation Tax are way too complicated and as many as 80% felt that current legislation was preventing both them and their contractor accountants from seizing tax planning opportunities.

The research found that nearly two thirds of SMEs did not know what tax allowances there are entitled to. Furthermore, over 70% felt that the tax system in this country was actually acting as a barrier for many would be entrepreneurs.

Small businesses are generally regarded as engine room for economic success in the UK and have become a key focus for the main political parties as we enter the final days of the election campaign. The proposed hike in employer’s national insurance contributions is still dominating the political landscape and many experts now feel that this could be the tipping point for a Tory victory.

A spokesperson from Sage said that there is a great deal of confusion in the SME marketplace with regard to the tax system in this country. They suggested that this was the cause of huge frustration amongst small businesses, many of who do not seek the advice of their accountant as much as they should do.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Confused like Green spaghetti by tanakawho