According to a study by Illuma Research of 250 managing directors, 88 per cent feel employee law and legislation is far too complex.

Some 67 per cent of respondents believe that pay and benefits legislation will cause problems over the next few years, with 72 per cent concerned that they spend too much time on HR issues.

Jayne Carrington, managing director of management consultancy Right Management, says: ‘If the government is looking to the private sector to grow and generate jobs, it needs to make life easier for those running SMEs.

‘Simplifying legislation would mean companies can focus on growing and strengthening their businesses for job and wealth creation for the economy.’