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P.ublished 11th October 2024
business
Businesses Need Support To Manage The Costs Of Employment Rights Reform
Image by Markus Winkler from Pixabay
Our research shows that there is appetite for some employment law reform within the business community. We welcome signs that government has taken on board concerns from business regarding the importance of probationary periods, as well as its commitment to consult meaningfully with business on the detail of the policies.
However, we remain concerned that these proposals are using a sledgehammer to crack a nut and will ultimately make it both riskier and more costly for businesses to employ staff at a time when business confidence is at its lowest point in two years.
The absence of measures to assist businesses, particularly SMEs, in coping with the additional costs which will arise from these reforms is also disappointing. We strongly encourage government to reintroduce a rebate scheme in the forthcoming Budget to help SMEs with higher costs resulting from changes to the Statutory Sick Pay entitlement.
"It appears that the Employment Rights Bill is not going to be quite as game-changing as either the trade unions hoped or the business lobby feared.
"The creation of a nine-month probationary period - instead of a simple scrapping of the two-year wait for unfair dismissal law to kick in - may assuage some of the fears of businesses, but we will have to see how this shapes up in practice. The ability to dismiss during probation is likely to be tightly circumscribed.
"Enhanced eligibility for sick pay will result in some extra costs to both the taxpayer and employers, but the amounts involved are fairly small, while further adjustments to parental leave are unlikely to be generally of great significance but could hit some small businesses badly.
"The headline issue is flexible working rights. The right to request from Day One, and the tightening of grounds for refusal, could well land employers with significant extra costs - which for many businesses will come as a shock. Over time they will attempt to reduce these costs in various ways - by taking on fewer workers, by using temporary contracts rather than permanent workers, and by passing the costs on to employees in terms of lower pay than they would otherwise have received, or other detriments to the employment package.
"Employers will be relieved that there is as yet no planned compulsory Right to Disconnect, but this remains an issue on the horizon and is something to which Labour will probably return.
"What is particularly worrying is that the enhanced power of trade unions, linked with these new employment rights, will make it very difficult for ministers to pursue effective policies to improve the pitiful level of productivity in the public sector. This does not seem to figure in their thinking."
Everyone deserves a decent, secure job they can build a life on.
This positive and ambitious plan to make work pay will raise incomes and boost living standards across Britain.
The Bill is a crucial first step towards delivering better-quality employment in every part of the UK.
Whether it's tackling the scourge of zero-hours contracts and fire and rehire, improving access to sick pay and parental leave or clamping down on exploitative bosses – this Bill signals Labour's commitment to upgrade rights and protections for millions.
Crucially – the Employment Rights Bill will give workers a stronger voice at work by making it easier for them to benefit from union representation. And it will consign to history the Tories’ toxic anti-union laws that increased industrial tensions and worsened disputes.
It is vital that we get on with making work pay for all and get the implementation right. The Tories’ race to the bottom on employment standards has been terrible for livelihoods and productivity.
Improving the quality of work in this country has to be a national priority. Working people urgently need more security, predictability and control over their lives.
And by establishing a level playing field on worker’s rights we can stop decent companies from being undercut by the cowboys.
“This is the biggest shake up of employment law in decades. These are huge changes and businesses must be engaged and supported on them every step of the way.
“If the right balance is struck then we have the potential to get more people into work and boost economic growth. But if the process is mishandled there is a danger these changes could have the opposite effect.
“It is important to stress that the legislation we are seeing today is a starting point. It is setting out a framework, and the detail and the mechanics of how this will operate will still need much further consultation.
“Many of these changes are going to need secondary legislation and it’s unlikely we’ll see major changes to business practices until 2026.
“But firms will want to see more detail on the timeline for these reforms and guarantees that there will be no surprises.
“We all recognise that a thriving workforce is more productive and that drives growth. We will continue to work with Government and the unions to ensure that a balance is reached. One that encourages businesses to recruit and has the right support for employees.”
“Politicians and businesses have a shared goal in wanting to raise living standards through higher levels of growth underpinned by investment and increased productivity.
“The government deserves credit for its willingness to engage with businesses and unions on how to make a success of the Plan to Make Work Pay.
“It’s that willingness to work together that can ensure we find the right landing zone and improve living standards by avoiding the unintended consequences that businesses have warned against.
“With a number of critical details still subject to consultation, it’s important the government builds on the good engagement to date to ensure we get the detail right on this decisive piece of legislation.”