LOCAL business leaders are concerned about a new European Court of Justice ruling which forces the UK government to extend the right to paid annual leave to short-term contract workers.

Andrew Ratcliff, Chief Executive of Bolton and Bury Chamber, said: "Changing the working time laws to entitle all workers to paid annual leave from day one could cause difficulties for employers using short term contract workers.

"More and more employers will be using contract staff to cover increased workplace absences due to new entitlements for working parents, who can now take four weeks parental leave, two weeks paid paternity leave and extended maternity leave for up to one year.

"Employers may now face a situation where they are paying for a short term contract worker for one or two months to cover for a working parent and having to find temporary staff to cover the short term contract worker who could be due 1-3 days paid leave."

He added: "This ruling is yet another example of government red tape strangling the growth of business enterprise."

Trade and Industry Secretary Patricia Hewitt has appointed a taskforce to look at how flexible working practices can be introduced in a business friendly way.

The work and Parent Taskforce will examine ways of giving working mothers and fathers of young children the legal right to ask to work flexible hours and to have their requests considered seriously by their employers.

It will seek to develop a "light touch legislative solution" which builds on best practice and avoids placing onerous burdens on business.

Patricia Hewitt said the Taskforce "confirms this government's commitment to listening to parents and bosses in order to achieve a workplace sympathetic to family and best for business."

Professor Sir George Bain, currently chairman of the Low Pay Commission, is to lead the new Taskforce.

Mr Nick Goulding, Chief Executive, Operations, for the Forum of Private Business, said: "We welcome the Government Task Force to advise on how family-friendly policies can be brought in without harming business.

"Small firms do not need a legal straight jacket to ensure family-friendly polices -- they have been doing it for years without legislation.

"A legal right for employees to move to part-time working would damage flexibility, competitiveness and ultimately jeopardise jobs."