The UK government’s plans to introduce new workers’ rights from day one of employment are sparking criticism from business leaders. Concerns are growing that these measures, aimed at improving job security, could lead to widespread layoffs before the changes take effect.
An “Ugly Rush” to Lay Off Workers
Rupert Soames, chairman of the Confederation of British Industry (CBI) and grandson of Winston Churchill, has expressed strong opposition to the proposed changes. He warned that businesses might respond by cutting jobs to avoid future liabilities.
Soames said, “I think not only will they not employ people, but they might let existing employees go. There could be an ugly rush before these new rules are enforced.”
The planned measures include:
Offering sick pay and protection from unfair dismissal from the first day of employment.
Banning exploitative zero-hour contracts.
While the government believes these changes will protect workers, Soames fears they could create new challenges for businesses, particularly for those operating on tight margins.
Concerns Over Employment Rights Bill
Soames also criticized the proposed probation periods under the Employment Rights Bill. He described it as a potential “adventure playground for employment rights lawyers,” raising concerns about increased litigation risks for employers.
Many businesses are already grappling with inflationary pressures and reduced growth rates. According to Soames, the new rules could further discourage companies from hiring.
National Insurance Hike Draws Criticism
Adding to the tensions, Chancellor Rachel Reeves’ decision to increase national insurance has faced backlash. Business leaders argue the move is undermining confidence and trust in the government.
Speaking to BBC Radio 4, Soames said, “The Chancellor told us there was an unexpected £22 billion hole in government finances, and business was expected to fill it. But this creates another hole – a lack of confidence and trust in the government from businesses.”
He emphasized that higher national insurance contributions would likely feed into inflation, slow economic growth, and worsen the challenges businesses face.
Businesses Losing Confidence
Recent data from Deloitte reveals that UK businesses are increasingly pessimistic about their prospects. A survey of 63 Chief Financial Officers (CFOs) from major companies found that 26% reported a more negative outlook compared to three months ago. This marks the first dip into negative sentiment since mid-2023.
The report indicates that confidence among business leaders is at its lowest since the COVID-19 pandemic in 2020. Factors contributing to this pessimism include:
Rising operational costs due to inflation.
Uncertainty around new regulations.
Concerns about the government’s economic management.
Calls for Economic Stability
The Chancellor’s recent trip to China has also drawn criticism, with some accusing her of neglecting pressing economic issues at home. Business leaders are urging the government to prioritize stability and clear communication.
As Rupert Soames put it, “Sometimes it feels like the government doesn’t understand the full impact of these changes on businesses, especially those that employ large numbers of people.”
Outlook
With the Employment Rights Bill and national insurance hike both in the spotlight, the UK government faces mounting pressure to balance worker protections with business sustainability. The coming months will be critical in determining whether these changes will strengthen the economy or lead to unintended consequences.
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