New rules on long-term sick leave will prevent small firms from hiring, claims a small business group.

Statutory entitlement to paid annual leave will now continue during long-term sick leave, following a European Court of Justice ruling.

Some 71 per cent of small firms say the law will affect the way they employ staff, according to a survey of 1,400 owner-managers from the Federation of Small Businesses (FSB).

Of those, 38 per cent say they will be more cautious about taking on new staff with health problems, 21 per cent report they will be less likely to hire and 17 per cent believe the law will make them more likely to dismiss staff on long-term sick leave.

John Walker, national chairman of the FSB, says: ‘The 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 ruling follows the introduction of the fit note this month, which has replaced the sick note and gives GPs the power to decide which jobs an employee signed off work can still do.

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