UK (Parliament Politics Magazine) – UK businesses warn Labour’s workers’ rights bill could hurt jobs and growth, urging peers to amend day-one unfair dismissal rules.
As reported by The Telegraph, Britain’s top firms warn Labour’s workers’ rights overhaul could risk “significant damage” to the economy.
Employers in care, retail, defence, and manufacturing warned that giving workers day-one rights to sue for unfair dismissal could worsen the worklessness crisis.
What did businesses warn peers about Labour’s workers’ rights bill?
Ahead of next week’s workers’ rights debate, a joint letter to peers warned that the bill may place additional strain on companies still dealing with the fallout from Chancellor Rachel Reeves’s recent tax reforms.
The letter marks the first time more than a dozen business groups have united to oppose the proposals, aiming to convince peers to amend the plans. The groups collectively represent tens of millions of private sector staff.
The bosses urged the Lords to approve an amendment that would legally enshrine a single six-month probationary period.
The letter, coordinated by the Federation of Small Businesses and signed by 12 other groups, including the Confederation of British Industry and UK Hospitality, states,
“Britain needs the job opportunities which only our businesses can provide. Without amendment, this bill will cause significant damage to employment and growth in this country, running counter to the Government’s plans to tackle rising economic inactivity.”
British Retail Consortium, Care England, the Food and Drink Federation, and Make UK also signed the letter, stating,
“The Government’s own analysis has shown that this Bill will impose an annual cost of £5bn on businesses at a time when many are already facing rising costs and business closures are mounting.”
A letter to peers stated that employers are “united” in urging amendments to the day-one unfair dismissal law, warning that current rules could harm the economy.
The letter adds,
“While each of us have different concerns about the bill – many, for example, wish to see greater acknowledgement of seasonal and flexible working – we are united in urging you to support the amendment … to set the qualifying period for unfair dismissal at six months.”
The resignation of the former deputy prime minister over underpaid stamp duty has raised hopes among businesses that Angela Rayner’s workers’ rights bill could be easier to modify.
How might the Lords amend the employment rights bill next week?
The Employment Rights Bill will undergo further scrutiny in the House of Lords next week, with additional amendments possible. It remains in its final stages and could receive Royal Assent before next month’s Budget.
A Conservative-proposed amendment to reinstate a six-month qualifying period for unfair dismissal claims was approved by the Lords, only to be rejected by the Commons.
Business leaders hope that Business Secretary Peter Kyle will soften some of the more contentious parts of the employment rights bill as the government seeks to boost growth.
What did Lord Hunt say about Labour’s Employment Bill?
Shadow Business Minister Lord Hunt warned that Labour’s 299-page Employment Rights Bill could overburden businesses, calling it the “Unemployment Bill.”
He stated,
“Their own declared primary mission is economic growth, and yet they’ve put forward a policy that actively undermines it. This Bill is not only anti-business, in my view it is anti-worker. If it passes in anything like its current form, it could be more appropriate to call it an Unemployment Bill.”
Lord Hunt said,
“The measures in this Bill will make it harder for existing businesses to thrive and near impossible for new ones to emerge. The result: a stagnating economy, diminished opportunities and worse outcomes for workers right across the country.”
He added,
“The only growth this Bill would deliver is growth in industrial strife, growth in administrative costs for business, growth in uncertainty and, ultimately, growth in unemployment. Unless it can be seriously improved, we will oppose this Bill all the way in the best interests of the working people of this country.”
What did Lord Londesborough say about Labour’s Employment Rights Bill?
Lord Londesborough criticized the Employment Rights Bill, calling it “another vampire squid sucking the life out of our economy.”
He said,
“This Bill is fundamentally misguided, out of date and out of touch and will wreck the spirit of enterprise. It will damage jobs, productivity and wages across both the public and private sectors – and that’s not just my view, but the OBR’s.”
Lord Londesborough added,
“The impact assessment claiming the Bill will have a net positive impact on growth is guilty of fantasy economics, suggesting its authors have little feel for or experience of creating jobs, developing careers or even meeting payroll.”
What did the government say about labour market reforms?
A government spokesman stated,
“Our reforms to the labour market and employment rights are crucial for our plans to drive economic growth.”
They added,
“Making basic protection against unfair dismissal a day one right gives financial security to people who don’t have it, and we are ensuring new laws work for businesses while continuing to make the tribunal system more resilient.”
What changes are expected to the workers’ rights bill?
The UK Employment Rights Bill introduces significant changes to employment law, including protection from unfair dismissal will become a “day one” right, removing the current two-year qualifying period.
The reforms state that dismissing an employee for refusing changes to key contractual terms, such as pay or hours, will be automatically unfair, with very limited exceptions.
It also said workers on zero-hours or low-hours contracts will have a right to be offered a contract with guaranteed hours that reflect the hours they have regularly worked.