The UK’s five largest business groups have warned that the government’s flagship workers’ rights package will be “deeply damaging” to the UK’s growth prospects and will worsen living standards in the UK.
In a co-ordinated effort, Britain’s ‘Big Five’ business groups have taken the unusual step of writing to all members of the House of Lords, urging peers to scrutinise and reform five key elements of the Employment Rights Bill which they said they would further upend confidence among British firms.
“Our collective position is that… the Bill will have deeply damaging implications for the government’s priority growth mission as well as their admirable focus on tackling rising economic inactivity,” the group of industry bodies warned, saying that “taken together, [the policies are] a recipe for damaging, not raising livings standards.”
With headline policies including the banning of ‘exploitative zero-hours contracts’ and outlawing so-called ‘fire and rehire’ practices, Labour’s workers rights package formed an integral part of the party’s manifesto ahead of last year’s general election.
It has been praised by unions and and left-leaning think tanks as a “much-needed upgrade” on employment legislation, but contentious elements of the overhaul have triggered a slew of warnings from businesses and their representatives, who argue they will inflict crushing red tape on UK firms and leave them exposed to “vexatious” lawsuits.
The letter, seen by City AM, is signed by senior officials at the British Chambers of Commerce (BCC) Confederation of British Industry (CBI), Institute of Directors (IOD), Federation of of Small Businesses (FSB) and Make UK, and constitutes one the fiercest and most significant manifestation of business backlash to date.
The lobby groups launched an excoriating critique of the Bill’s proposed safeguards against redundancies, warning of the effects the policies will have on hiring and job creation. The package includes a suite of new rights for workers from day one of a new job, including protection from unfair dismissal.
But the ‘Big Five’ warned Lords that the Bill would leave firms vulnerable to lengthy and expensive Tribunal hearings, which would ultimately result in business owners becoming “more cautious about creating new jobs when taking the risk of trying to grow”.
Andrew Griffith, the shadow business secretary, said “the business groups are correct when they say, as currently drafted, the Bill will have deeply damaging implications for the government’s priority growth mission.”
He added: “The world has changed, the government must shelve this disaster of a Bill now.”
The letter, which acknowledged that many of the overhaul’s principles “are not contentious”, also highlighted the damaging provisions around contractual term changes. They claim the changes would “stifle innovation, productivity and growth”.
Other objections raised included the Bill’s removal of accountability mechanisms on trade unions, which the business groups branded a “recipe for conflict”. The letter states that “removal of the statutory recognition and strike ballot turnout thresholds upends firms’ confidence that union representatives speak on behalf of staff.”
The letter’s authors say they “are calling upon the Lords to fully scrutinise and improve this legislation to ensure it is genuinely both pro-business and pro-worker, and to prevent unnecessary harm to employment and growth.”
A spokesman for the Department for Business and Trade said: “We’ve consulted extensively with business on our proposals, and we will engage on the implementation of legislation to ensure it works for employers and workers alike.”
