Business start-ups could be set back by new rules on long-term sick leave, which are said to be preventing nearly three-quarters of small companies from employing new staff.

Statutory entitlement to paid annual leave will be maintained during long-term sick leave under a European Court of Justice ruling related to the Working Time Directive.

According to figures from a Federation of Small Businesses (FSB)-ICM poll, the ruling will affect the way 71 per cent of companies hire staff, with 38 per cent likely to be wary about employing people with health problems.

While 21 per cent of the 1,400 respondents admitted that they will be less likely to take on new staff, 17 per cent said they will be more inclined to sack workers on long-term sick leave.

"The changes in the law on sick leave are hampering employment opportunities to get the long-term unemployed back into work," commented FSB chairman John Walker, who urged a review of the regulations.

Business start-ups can outsource their back office systems in order to free up their time to concentrate on growth.