A survey of 553 senior decision-makers by recruitment firm Brook Street shows that 9 per cent of respondents think that the UK’s existing employment law is ‘fit for purpose’.

When quizzed further, some 18 per cent believe that, in its current guise, the legislation is ‘over-engineered’. A further 16 per cent say that it doesn’t provide enough flexibility.

The findings, compiled by YouGov, come after Vince Cable unveiled alterations to employment law which will make it easier for employers to pay off and rid themselves of underperforming staff.

Businesses in the UK feel burdened by the intricacies of red tape, the research shows, with only 37 per cent admitting to being ready for the pensions reform that is due to be introduced in October. Over a quarter of businesses (28 per cent) are not even aware of the impending changes.

Some 62 per cent feel that employment regulation has a negative impact on bottom lines and say that it leads to nervousness about under-performing and being non-compliant.

Erika Bannerman, sales and marketing director at Brook Street, comments, ‘While steps are being taken to reduce red tape, it’s clear form our conversations with businesses that many of them are still struggling.

‘Smaller businesses are most at risk here as they have limited resources to keep on top of changes, so it’s vital they work with employment experts and recruiters who can guide them through the regulatory maze and give them the confidence they need to grow their businesses.’

Commenting on the changes announced last week by Cable, Pauline McArdle, partner at SNE Denton UK, says, ‘The government wants to help businesses manage their workforces more flexibly and simplify the termination and tribunal process.

‘The new settlement agreements seem to be little different from our existing compromise agreements, except for the suggestion that employees may no longer be required to take legal advice.’