Labour was last night told its plans to hand workers new rights will be a ‘disaster’ for the economy.
Business minister Peter Kyle told crowds of Labour activists that he would implement the controversial package ‘in full’ yesterday at its party conference.
And he hailed the ‘extraordinary work’ of Angela Rayner, the architect of the bill who quit as deputy prime minister earlier this month.
But businesses were left fuming last night after it appeared their calls for critical tweaks to the legislation have gone ignored, cementing fears over future job losses.
Industry groups, who together represent hundreds of thousands of companies, reiterated concerns the bill will pile more unmanageable costs onto firms and make it harder to employ people.
Many companies have already struggled with the introduction of higher National Insurance contributions and wages earlier this year.
Business minister Peter Kyle (left) told crowds of Labour activists that he would implement the controversial package ‘in full’
Leading voices in the City, including Next boss Lord Simon Wolfson, have warned the reforms could make it harder for businesses to employ new people. There are particular concerns for sectors that rely on part-time and seasonal workers, including retail.
Hugh Osmond, the founder of Punch Taverns and former boss of Pizza Express, said: ‘It will be a further disaster for employment. Who will want to take on staff without a probation period? This will be a further huge negative for the economy, not just hospitality.’
Following Rayner’s exit, businesses had hoped to convince Blairite Peter Kyle and Rayner’s successor, David Lammy, to delay or dilute some parts of the bill.
They are worried about Labour’s plans to introduce ‘day one rights’ for new staff and instead want to see extra protections against unfair dismissal come into effect after six months.
There are also fears that reforms entitling workers to contracts with a minimum number of weekly hours could go awry if the level is set too high, making it more difficult to employ students during term time, for example.
Lobbyists are making their case at Labour’s party conference as aspects of the bill are due to be consulted on in the coming weeks.
Leading voices in the City have warned the reforms could make it harder for businesses to employ new people
Tom Ironside, director of business and regulation at the British Retail Consortium, said: ‘Government will make a rod for its own back if it implements the Employment Rights Bill in its current form.’
The group warned the bill presently makes a mockery of Labour’s mission to get Britain back to work ‘as there will simply be fewer jobs available because of its policies’.
‘Cracking down on unscrupulous employers who do not treat their employees fairly is crucial, but it must not punish responsible businesses offering flexible employment opportunities and reduce opportunities for people looking for work,’ Ironside added.
Echoing these fears, the Institute of Directors’ (IoD) principal advisor for employment, Alex Hall-Chen, said: ‘If the government is serious about achieving economic growth it needs to urgently implement meaningful changes to the Bill, particularly around changes to unfair dismissal, guaranteed hours, and trade union reforms.
‘In the absence of action to address employers’ concerns, the Bill will continue to have a negative impact on job creation and economic growth.’
And the bill could have ‘unforeseen and unintended consequences for business,’ which could ‘undermine the stability and growth the government wants,’ warned Patrick Milnes, head of policy at the British Chambers of Commerce.
Andrew Tighe, policy director at the British Beer and Pub Association, said the bill would ‘hurt workers’, especially those reliant on seasonal jobs.
Craig Beaumont, executive director at the Federation of Small Businesses, added: ‘It’s clear to hundreds of thousands of businesses up and down the country that a rethink is very much needed.
‘The day-one dismissal proposals in the Bill need to be amended, so that a hiring error doesn’t lead to the expense and stress of a tribunal from the very first day.
‘The last thing the country can afford is for small firms, who employ three in five private sector workers, to pause their hiring and expansion plans because taking someone on suddenly comes with far greater risks.’
And UKHospitality boss Kate Nicholls criticised Labour for posing ‘an increased regulatory burden on businesses’ amid 84,000 job losses in the sector following last year’s Budget.
A spokesman for the Association of Convenience Stores (ACS) said: ‘It’s essential that the Bill avoids unintended consequences and unnecessary bureaucracy, especially at a time when retailers are under pressure to make every hour in the business as productive as possible.’
Their remarks came as new figures from Lloyd’s today revealed that fewer businesses plan to take on more staff.
Some 55 per cent of businesses said in September that they plan to hire over the coming year, falling from 62 per cent in August.
Matthew Percival, future of work and skills director at the Confederation of British Industry (CBI), said: ‘The Bill as currently drafted will backfire.’
Employers say the approach to ‘day one rights’ is ‘damaging their confidence to hire’, said Mr Percival.
‘It’s young people, the unemployed and the long-term sick who lose out in that situation,’ he added.
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