Seven of Britain’s most influential industry bodies have urged MPs to accept an array of House of Lords amendments to the government’s workers’ rights package, warning the overhaul is already having a “chilling” impact on jobs and the economy.
The cohort of heavyweight lobby groups – which includes all the so-called ‘Big Five’ business bodies as well as the British Retail Consortium (BRC) and UK Hospitality – said some of the changes to the contentious Employment Rights Bill proposed by peers gave businesses “real hope”, and called on MPs to accept them when the Bill reaches the Commons.
David Hale, government affairs director at the Federation of Small Businesses, told City AM it was “essential” the government accepts improvements made to the workers’ rights bill by the Lords, including a “crucial” proposal to extend workers’ qualifying period to six weeks.
And the BCC’s Jane Gratton said parliamentarians must back the amendments to the package if they want businesses to help “grow the economy and create more opportunities for people across the country”.
Peers tabled several amendments to the government’s flagship Employment Rights Bill during a report stage debate this week, many of which sought to water down some of the overhaul’s burdensome demands on businesses.
Chief among them was an attempt to remove the provision to protect workers from unfair dismissal at “day one” of employment – instead installing a probation period of six months. Lords also suggested MPs vote to retain the turnout threshold of 50 per cent of union members voting in a ballot for it to be valid.
The changes were hailed as “positive, practical and pragmatic” by Helen Dickinson, chief executive of the British Retail Consortium, who warned that ignoring them would undermine ministers’ stated ambition to “get Britain working again”.
But she cautioned: “Even with these amendments accepted, retailers remain worried about the consequences for jobs from other areas of the bill.”
The ‘biggest upgrade to workers’ rights in a generation’
The Labour party made delivering the “biggest upgrade to workers’ rights in a generation” one of its flagship manifesto pledges in the run-up to last year’s general election. Deputy Prime Minister Angela Rayner has spearheaded the drive, which contains several measures popular across UK plc and unions, including banning so-called ‘fire and rehire’ practices.
But businesses have warned that other reforms – like handing workers a horde of new rights from day one of a new job and putting bosses on the hook to pay statutory sick pay from the first day of a staff member’s illness – will harm their ability to take on new staff and leave them vulnerable to costly and “vexatious” lawsuits.
The Institute of Directors (IoD) found that seven in 10 of its members believe the overhaul would lead to fewer new hires and kibosh the government’s hopes of kickstarting the economy.
Responding to the Lords amendments, the lobby group’s principal policy adviser for employment, Alex Hall-Chen, said: “Recent amendments… are a welcome reflection of engagement with the business community to understand its key concerns with the bill.
“[They] will go a considerable way to stemming the negative impacts that the bill’s measures are already having on employers’ appetite to hire.”
The House of Lords has proven a thorn in the government’s side so far as it hopes to push its workers’ rights package through Parliament, and its latest amendments mean the Bill will go back to the Commons for MPs to scrutinise. Several high-profile peers – including Next boss Lord Wolfson – have been vocal critics both of measures contained in the bill, while others have accused the government of failing to carry out “fair, effective and comprehensive parliamentary scrutiny”.
As part of its latest set of amendments, peers also urged the government to carry out greater consultation on plans to scrap ‘exploitative’ zero-hours contracts and make it easier for employees to request flexible working. Additionally, industry groups supported the proposal to delay employees getting a right to request guaranteed hours until 26 weeks, instead of making employers continuously offer them to people even if the staff member prefers a flexible working arrangement.
Matthew Percival, future of work and skills director at the CBI, told City AM: “The Employment Rights Bill is having a chilling impact on the labour market even before it comes into effect, with jobs down, disputes up and pay slowing.”
He added that changes suggested by the Lords deliver on the government’s promise “in a way that better supports its mission to grow the economy”.
“The government responded with pragmatism to business concerns that giving employees a veto over reasonable changes at work would have empowered a disruptive few rather than stopping the next P&O Ferries.
“We now need to see that sensible approach to finding a landing zone that protects jobs and investment replicated elsewhere in the legislation.”
UK Hospitality’s Kate Nicholls said the measures proposed by peers were “sensible and helpful” and would minimise the “adverse impact on businesses, workers and jobs”.
Meanwhile Make UK’s head of employment, Jamie Cater, urged the government to accept the amendments, telling City AM: “The government needs to reflect on the planned reforms to protection from unfair dismissal and zero hours contracts, to ensure employers retain appropriate flexibility when recruiting the skills they need.
“A right for employees to request, rather than be offered, a guaranteed hours contract if they are on zero or ‘low’ hours as suggested by the Lords is the right approach. The Bill should also enshrine the promised ‘light-touch’ process for fair dismissal under the new day one right and statutory probation period.”
A government spokesperson said: “These changes would undermine new rights for millions of workers, and that is why the government rejected them.
“The government was elected with a clear manifesto commitment to make work pay and that is exactly what we will do.
“That’s why our landmark Employment Rights Bill will deliver these new rights for more than 15 million workers in the UK as part of our plan for change.”