Unions and businesses debate Labour’s flagship employment rights legislation.
We need to turn the page On a broken status quo in the labour market
Paul Nowak – General secretary, Trades Union Congress
The second reading of the Employment Rights Bill was a defining moment for this parliament. On the one side, we had a Labour government seeking to usher in the biggest upgrade of workers’ rights in a generation. And on the other, Tory and Reform MPs marching through the lobbies to vote against this landmark legislation, attempting to deny millions essential safeguards like day one sick pay and protection from unfair dismissal.
The Tories and Reform represent a broken status quo and a broken way of doing things. Labour is right to turn the page. Driving up employment standards is good for workers, business and the wider economy. Most employers in this country treat their staff well and don’t use exploitative practices like zero-hours contracts and fire and rehire.
By levelling the playing field on workers’ rights and protections, and helping workers access unions, this bill will give more people more predictability and control over their lives. And it will stop decent firms being undercut by bad ones.
Despite repeated efforts by some to paint the bill as an existential threat to UK PLC, the impact assessment tells a very different story. At just 0.4 per cent of total employment costs the direct impacts for business are negligible. And more importantly the assessment is crystal clear that the substantial wider gains the package will bring can be expected to greatly offset these monetised costs. Improving the quality of work in this country will boost living standards for millions of low-paid and insecure workers – and it will boost the health, wellbeing and productivity of our workforce.
Over 17 million working days were lost due to stress, depression or anxiety last year.
As recent TUC polling has shown, the government’s Make Work Pay Agenda is popular across the political spectrum and with the vast majority of company managers and decision-makers.
When people are treated well, they perform better and are more likely to stay with their employer. Many of the bad-faith arguments we’re hearing against strengthening workers’ rights are the same ones used against the minimum wage 25 years ago. The naysayers were wrong then and they are wrong now.
The new deal is an opportunity. But the business voice should be heard
Shevaun Haviland – Director general, British Chambers of Commerce
If delivered in the right way, the government’s employment reforms have the potential to benefit good employers all around the country. But making this a reality will depend on a careful and balanced approach to implementation that listens to the needs of business.
As director-general of the British Chambers of Commerce (BCC), I have been involved in these discussions with government, helping to bring the views of businesses of all sizes and sectors up and down the country to the table. Most firms are thoughtful and considerate employers who want to do the right thing. They recognise that a workforce that is well cared for is the key to supporting growth, investment and jobs.
But, with an impact assessment released for the Employment Rights Bill that shows £5bn of cost to business from these reforms, business anxiety is already growing. Our latest Quarterly Economic Survey reveals signs of stagnant business investment, sluggish improvements in cashflow and high levels of concern over taxation.
So, this legislation must be both pro-business and pro-worker. Up to now, the engagement that we have had with the government has been exceptional, with constructive and meaningful work done over recent months to help reassure businesses and to move the bill in the right direction.
However, there is still more to be done. Businesses remain concerned about the detail of policies. Will it add to risk, cost, and complexity? Will it make it harder to run and grow a profitable business? Will the new probationary period, for example, help firms recruit a good fit for the role? Will firms have the flexibility to respond to changes in demand?
It’s vital the legislation strikes the right balance, and that these policy proposals will be proportionate and affordable. This is all the more important for small- and medium-sized enterprises, who will be most impacted by the changes.
The Employment Rights Bill is a big moment for the business community and offers a huge opportunity for the UK workforce. If delivered well, both businesses and their employees will flourish, increasing productivity and prosperity for all.
Workers’ rights can be Strengthened. But we Mustn’t deter investment
John Foster – Chief policy and campaigns officer, Confederation of British Industry
Politicians and businesses are united in wanting universal access to fairly paid, fulfilling work. But to get there, the UK needs business investment that creates new jobs, that creates opportunities to gain new skills helping people get back into work or progress their careers, and that boosts productivity to unlock the growth needed to fund public services and raise living standards.
But labour shortages, regulation and tax policies are increasing the cost of employment and denying businesses the headroom to investment. Fifty two per cent of businesses now see labour costs as a threat to competitiveness. The Employment Rights Bill has the potential to be both pro-business and pro-worker and to be compatible with accelerating growth and business investment. Achieving that landing zone is possible, but it will require addressing key issues before the bill is passed.
The bill requires businesses to calculate and offer staff new terms whenever they work overtime. That’s a small hospitality business having to do constant calculations, at a cost to the business but without additional benefit to the workers. Employers face large legal bills and significant disruption each time the fairness of a dismissal is tested at tribunal, even if they have followed due process. That’s why tribunal claims over failed probations risk firms becoming more reluctant to create new jobs and more cautious about who they hire when they do.
There are concerns too about getting the balance wrong on restructuring and industrial relations. Making it harder to change terms and protect jobs than to cut jobs through redundancy risks worse outcomes for workers. Putting workplace democracy at the heart of collective representation can ensure that industrial action is a decision taken with the support of the workforce, not just a vocal minority.
The government deserves credit for the pace and quality of its engagement with business. However, the scope of the legislation means there are issues that have had limited business input. Maintaining an open, positive approach to business engagement is vital to mitigating unintended consequences. Ultimately, that is what will deliver a landing zone which strengthens workers’ rights without making it harder for businesses to invest and grow.
This article first appeared in our print Spotlight Party Politics Special, published on 15 November 2024.
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