New rules on long-term sick leave are preventing small firms from hiring new staff, according to the Federation of Small Businesses (FSB).
A new ruling from the European Court of Justice under the Working Time Directive means that statutory entitlement to paid annual leave will continue during long-term sick leave.

Figures from an FSB-ICM poll of more than 1,400 respondents show that the ruling will affect the way 71% of businesses employ.

Of those, 38% said they will be more cautious about taking on new staff with health problems, 21% will be less likely to take on new staff and 17% will be more likely to dismiss staff on long-term sick leave.

A separate ruling under the Working Time Directive, which will allow workers to convert annual leave into sick leave, taking the annual leave at a later date, will have a negative impact on over half (54%) of the respondents' businesses, the poll revealed.

As the debate on the Working Time Directive reopens this autumn, the FSB is urging the European Commission to review these rulings to ensure the law is rewritten to reverse these decisions. It says this will encourage small firms to take on more staff at a time of already high unemployment, helping to bring the country further onto the road to recovery.

The FSB's national chairman John Walker said: "It is well known that small firms are the country's key employers and have done all they can to retain their employees and take on new staff throughout the recession. However, measures put in place by the European Court of Justice on sick leave are hampering small businesses' ability to do the job at hand and help tackle unemployment - which is at its highest for 17 years."

The FSB is also calling for more advertisement of the Fit Note, which replaces the sick note. The Fit Note aims to focus on what employees can do at work, to help get them back to work sooner. The FSB says this will help ease staff on long-term sick leave back into work and give small business owners more incentive to keep hold of their staff.