The UK’s five leading business groups have issued a rare joint letter urging the government to reconsider the proposed Employment Rights Bill, warning it could hinder economic growth and job creation.
The British Chambers of Commerce (BCC), Confederation of British Industry (CBI), Institute of Directors (IoD), Federation of Small Businesses (FSB), and Make UK have called for amendments to the bill ahead of its upcoming scrutiny in the House of Lords.
While they support the government’s objectives to enhance productivity and workers’ rights, they caution that the current draft risks imposing damaging costs and restrictions on employers.
The Employment Rights Bill, described by ministers as the “biggest upgrade to workers’ rights in a generation”, seeks to grant new protections from day one of employment.
These include sick pay, parental leave, protection against unfair dismissal, and the right to request flexible working. It also aims to tighten regulations on zero-hour contracts and restrict controversial “fire and rehire” practices.
However, business leaders argue that some measures could backfire. They warn the legislation could deter firms from hiring – particularly for entry-level or part-time roles – due to the potential for increased legal disputes and added administrative burdens.
The groups are particularly concerned that mandatory fixed-hours contracts may reduce labour market flexibility, affecting both employers and staff. “This bill, as it stands, risks damaging employment and undermining the very goals it seeks to achieve,” they said.
In response, a government spokesperson reiterated that the reforms will deliver the most significant improvement in employment rights in decades.
“These proposals enjoy broad support from both the public and the business community,” the spokesperson stated, adding that the government will continue to work with employers to ensure the bill’s implementation is balanced and effective.
Despite the government’s assurances, the Office for Budget Responsibility (OBR) recently noted it was unable to assess the bill’s potential impact due to a lack of detailed information.
Nonetheless, the OBR cautioned that regulations affecting business flexibility and the wider labour market are likely to have “material and probably net negative impacts on employment, prices and productivity.”
