Heavy-handed officials used to dealing with abusive gang masters are being wrongly deployed to target forestry gangs in the Westcountry by turning up clad in stab-proof vests, it is claimed.
Forestry workers say the Gangmaster Licensing Authority (GLA), which was set up to root out exploitation after Chinese cockle pickers were drowned in Morecambe Bay in 2004, is using "Draconian" powers to crack down unfairly on the sector.
They claim the GLA is collecting hundreds of pounds each year in unnecessary fees and prosecuting workers for trivial breaches of laws more applicable to agriculture, shellfish gathering and food processing.
John Wilding, general manager of forestry and environmental economy at Clinton Estates, said the GLA was using "the ultimate sledgehammer to crack a nut".
"They have been very pro-active and in-your-face with forestry squads – using quite Draconian powers and turning up in stab vests," he added.
"There has never been the kind of abuse within the forestry sector that the GLA was brought in to deal with – it just doesn't have that kind of culture of abuse and large contractor teams."
Under GLA rules, small businesses are required to pay an annual licence fee of £400, fill in forms and face inspection.
Breaches such as forgetting to register a change of name or address or delaying the renewal of a licence can carry a fine of up to £1,800.
The trade body Confor, which represents 2,000 forestry and wood-using businesses, is calling on the Government to untie the industry from restrictive red tape which threatens to put jobs at risk.
It wants the Department for Environment, Food and Rural Affairs (Defra) to heed the recommendation by a taskforce set up to tackle red tape that the sector should be exempt from GLA regulation.
Stuart Goodall, Confor chief executive, said a decision to exempt forestry from GLA control cannot be put off any longer but fears the Government is set to dodge the issue and leave it the Forestry Regulation Task Force.
He added: "The GLA is destroying rural jobs in areas with few other sources of regular employment and placing an unnecessary cost burden on small businesses without any benefits being provided.
"The task force highlighted the low risk nature of the forestry sector and this reflects the GLA's own analysis.
"It is a scandal this has gone on so long already and it is vital that the Red Tape Challenge takes the decision to remove forestry to protect and promote rural employment and the health of England's woodlands."
Defra said no final decision had yet been taken and a change to the GLA regulations "had not been ruled out", adding that there would be an announcement in "a few weeks".