Red flags raised over Employment Rights Bill

The Employment Rights Bill currently passing through Parliament is one of the Labour government's flagship policies. This major piece of legislation promises a 'pro-business, pro-worker' approach that will boost both pay and productivity. However, business groups have raised red flags over some of the measures contained in the Bill and highlighted some 'serious concerns'. Here, we take a look at the Employment Rights Bill, its aims and the reservations of UK businesses.

Security and growth

The government wasted little time introducing the Employment Rights Bill to Parliament - it was one of their key policies of the first 100 days. The government claims the Bill will tackle poor working conditions and benefit businesses and workers alike. This will help deliver economic security and growth to businesses, workers and communities across the UK, it adds.

The government is aiming to get the labour market moving as currently one in five UK businesses with more than ten employees are reporting staff shortages.

Flexibility is key

The government says that flexibility, for workers and businesses alike, is key to answering this challenge. As a result, it wants to upgrade the law to ensure it is fit for modern life and a modern economy. 

The existing two-year qualifying period for protections from unfair dismissal will be removed, delivering on the manifesto commitment to ensure that all workers have a right to these protections from day one on the job. 

The government will also consult on a new statutory probation period for companies' new hires. This, it says, will allow for a proper assessment of an employee's suitability to a role as well as reassuring employees that they have rights from day one.

The Bill will bring forward 28 individual employment reforms, from ending exploitative zero hours contracts and fire and rehire practices to establishing day one rights for paternity, parental and bereavement leave for millions of workers.

Fit for a modern economy

Deputy Prime Minister, Angela Rayner, says: 'The UK's out-of-date employment laws are holding our country back and failing business and workers alike. Our plans to make work pay will deliver security in work as the foundation for boosting productivity and growing our economy to make working people better off and realise our potential. 

'Too many people are drawn into a race to the bottom, denied the security they need to raise a family while businesses are unable to retain the workers they need to grow. We're raising the floor on rights at work to deliver a stronger, fairer and brighter future of work for Britain.'

Red flags

However, the Regulatory Policy Committee's (RPC) report into the likely impacts of the Employment Rights Bill has raised eight red flags about the potential costs to small firms.

In light of these findings, the Federation of Small Businesses (FSB) is urging the government to address significant concerns about its Employment Rights Bill.

The issues included a lack of detailed consultation on wide ranging changes to trade union powers, greater restrictions and penalties for firms who need to make workforce changes and more responsibilities, costs and complexity for employers. 

Wake-up call

Tina McKenzie, Policy Chair at the FSB, says: 'This is a sharp wake-up call for ministers who must think again about the dangers of a cavalier approach to jobs and work. The country cannot afford to pile further cost and risk on to small employers based on such an overwhelmingly weak evidence base.

'With the red-flagged impact assessments including high-impact measures like formal dismissal from day one, the government must urgently do the basic work required to understand the impact of its own policies and accurately quantify the likely impacts on employers and the labour market.'

Serious concerns

Meanwhile, the British Chambers of Commerce (BCC) has highlighted businesses' serious concerns to a Parliamentary committee.

The BCC says that employers are concerned that major decisions have been taken and written into the Bill without detailed consultation with business. The government's own assessment suggests that the legislation will cost businesses almost £5 billion per year, with SMEs impacted the most, it adds.

These costs follow a 'harsh budget for business' adds the BCC, which warns about the scale and scope of changes being introduced at 'breakneck speed'.