Owners of small businesses have warned that the Government’s new employment rights proposals would “threaten employment and growth”.
The Federation of Small Businesses (FSB) attacked the Make Work Pay plans as “clumsy, chaotic and poorly planned”, complaining that “dropping 28 new measures onto small business employers all at once leaves them scrambling to make sense of it all”.
It claimed the proposals would increase economic inactivity and risked deterring small employers from taking chances when hiring, such as people who have had a significant period out of the workplace.
The Bill’s employment reforms include ending zero hours contracts, curbing fire and rehire practices, improving parental and bereavement leave, removing the lower earnings limit on statutory sick pay, introducing a statutory probation period for new hires, and reducing the waiting period for pay.
The two-year qualifying period for unfair dismissal would be axed, giving employees protection from day one on the job.
Tina McKenzie, policy chair at the FSB, said: “Plans to give day one unfair dismissal rights to new employees will add to the risks associated with hiring people. That increased risk will inevitably deter small employers from taking on new people, for fear of facing an employment tribunal simply because a new recruit turns out to be unsuited to the role. That’s bad for jobs, and a barrier to growth and investment.”
The legislation would require employers to create action plans to address gender pay gaps and to support employees through the menopause alongside protections against dismissal for expectant and new mothers.
The proposals, which are up to two years off implementation if passed, also include a new “fair work agency” combining existing enforcement bodies to ensure employees get holiday pay and to allow business owners to seek help with the rules.
Tina added: “Small firms are the ones most likely to give opportunities to people furthest from the labour market, such as those returning after long-term health issues or caring responsibilities.
“This legislation risks deterring small employers from taking a chance on someone who has had a significant period out of the workplace, shutting those doors and deepening social exclusion.
“The added employment costs the proposed legislation will inevitably bring will also jeopardise job creation, which will in turn be a brake on growth and investment.”
Deputy Prime Minister Angela Rayner said: “This government is delivering the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy.
“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.”
Click here for the Government’s full Make Work Pay proposals.
