U.K.’s Fallon Backs Exempting Small Firms From Job Rules

Business Minister Michael Fallon signaled support for exempting Britain’s smallest companies from some employment regulations, arguing it would encourage them to hire staff.

Fallon, a Conservative member of Prime Minister David Cameron’s coalition government, offered his view at a news conference in London today. He was speaking alongside former Diageo Plc Chief Executive Officer Paul Walsh, who’s advising the government on cutting regulation and who said small firms should be freed from all rules.

“This is what they did in the U.S. so successfully in the 1980s -- specifically exempt small businesses,” Fallon said when asked if he agreed with Walsh. “We have 6 million young people in Europe who have no job at all. Their best chance of getting into work is getting into a business that’s growing.”

Fallon’s office later said he supports keeping some labor rules, such as the minimum wage and basic safety protections. Still, his comments highlight the divide within the coalition about the way to promote growth. Liberal Democrat members of the government, including Fallon’s boss, Business Secretary Vince Cable, have in the past blocked moves to reduce employment protections.

Beecroft Report

Cameron’s office offered support to Fallon’s position. “We want it to be easier for companies, including small companies, to be able to hire people,” the premier’s spokesman, Jean-Christophe Gray, said today when asked whether it should be easier for small businesses to fire staff.

The comments revive an argument within the coalition about a 2012 report by Apax Partners Worldwide LLP’s Adrian Beecroft, whose proposals included “no-fault” dismissals where employers could pay off staff without justifying their sacking -- branded “fire at will” by the Liberal Democrats. Beecroft’s report is cited by both Conservatives and Liberal Democrats as an example of what the Tories would like to do if they weren’t in coalition.

Fallon and Walsh were speaking at an event to mark the publication of a report written by six business leaders, including the former Diageo CEO, on reducing European Union regulation. They urged that micro-enterprises -- those employing fewer than 10 people -- should be exempt from “all EU employment law.” The Department for Business said this referred to any new laws. Walsh said his view was that it should apply to existing ones, too.

‘Different Dynamic’

“Exempt small businesses from regulations -- any,” Walsh said. “Start from there.”

Later in the news conference, after Fallon had left, Walsh said there would be a “different dynamic” between working for a larger company and having employment protection and working for a small one. He said this would encourage businesses to hire that currently “will not take anyone at all.”

The opposition Labour Party attacked Fallon over the remarks. “Fallon’s comments show just how out of touch the Tory-led government are,” the party’s industry spokesman, Ian Murray, said in a statement. “When families across Britain are facing a cost-of-living crisis, the last thing they need is yet more insecurity at work.”

Before it's here, it's on the Bloomberg Terminal.