As the government’s long-awaited overhaul to workers rights’ returns to the Commons, small business owners are worried not enough has been done enough to accommodate their concerns, writes Ali Lyon.
For a company that promises to unleash clients’ growth by helping them overcome knotty engineering issues, Bass Rock consultancy has adopted a staid approach to its own development.
In the fourteen years since it was founded, boss Matt Perks chose to keep headcount low and be “very particular” about the work it took on. Rather than providing the identikit solutions adopted by some of his competitors, he chose to offer a select number of clients a few “really high-end and experienced individuals” instead.
“We offer quite specialised support [to airports, government and defence firms], and we only look for highly-skilled and experienced people to join us,” he says, speaking to City AM from his firm’s headquarters in Bristol.
That was at least until – with a solid pipeline of new business and half an eye on his and his senior colleagues’ semi-looming retirements – he thought he should change tack.
“From a recruitment perspective, we have traditionally had to be very careful, and make sure we get the right people in,” he says. “But we’re actually now at a point where we want to grow a layer underneath [our senior consultants] – to bring growth in and train up a new generation of people.”
An injection of less senior – albeit still highly skilled – staff would not only allow the business to take on more work, but free up Perks and his senior colleagues’ time to focus on the more high-level work that’s in the best interests of Bass Rock.
There is just one thing giving him pause for thought as he mulls upping his firm’s staff numbers beyond the half-dozen figure around which it has wavered for much of its fourteen-year existence: the government’s upcoming workers’ rights overhaul and some of the more contentious measures contained within it.
Labour’s long-promised workers’ rights reforms
Matt Perks, director, Bass Rock (Image courtesy of Bass Rock)
Ever since Keir Starmer’s incarnation of the Labour Party began fleshing out its promises to the electorate, passing a ‘New Deal for Working People’ has been among its flagship policies. Widely regarded as one of the largest overhauls of UK workers’ rights in generations, the reforms – a pet project of now-deputy Prime Minister Angela Rayner – were front and centre of the party’s general election campaign.
Among its headline measures – heralded as “badly needed” by the Trade Union Congress (TUC) senior employment rights officer Tim Brown – are sweeping changes to zero-hour contracts, giving workers a legal right to request flexible working, and ending so-called ‘fire and rehire‘ practices; a process whereby employers make a set of staff redundant before re-signing the same workers up to do a similar job specification on new contracts, often with worse terms.
But for Perks it is another element of the package – currently making its way through parliament in the shape of the Employment Rights Bill – that is forcing him to reassess his hiring push; one which, he claims, could ensnare him in years-long legal battles that would be ruinous for Bass Rock, its staff and its clients.
“We’re particularly concerned about changes being proposed around unfair dismissal,” he says. “At the moment we mostly recruit from agencies and direct contacts. But if this Bill is brought in and it becomes much easier for somebody to take you to Tribunal from day one, or even quite early from being with us, then that gives us a real problem.”
Concerns from day one
The measure consuming Perks’ thoughts and fears relate to the various rights that the government want to give new employees from their first day of a new job, including statutory bereavement leave, paternity and parental leave, and – as Perks highlights – protection from unfair dismissal.
It is not just the owner of Bass Rock with concerns about what the reforms to redundancy laws might mean for his business.
Without legal and HR functions on which larger firms can call, the battle to conform to the suite of new regulations will be a tall order for all small business owners who – according to the Federation of Small Businesses (FSB) – are almost unanimously fearful of what the Bill might bring.
Research conducted by the group – the UK’s largest industry body for small and medium sized enterprises (SMEs) – found 92 per cent of its members have concerns about the Bill as it is currently written.
“We’ve very rarely seen such consensus on something as we have with this,” FSB executive director, Craig Beaumont says. “And that view is that they’re worried – really worried – about it.”
The same study of FSB members found 75 per cent of respondents cited the reforms to rights from day one as their number one grievance. In the Bill’s current manifestation, says Beaumont, a worker could turn up on day one – or “maybe not even not even turn up” – wait to have their contract revoked, and then make a claim with an Employment Tribunal for unfair dismissal.
Or, as shadow business secretary Andrew Griffith puts it to City AM, “an employee could start a new job in the morning and take an employer to tribunal in the afternoon”.
And given the parlous state of the UK’s justice system, this scenario, Beaumont adds, could take north of two years to resolve.
But union officers like the TUC’s Brown question whether the fears voiced by Beaumont, Perks and Griffith would play out quite so dramatically.
“I think both us and employers would be in agreement that delays in the tribunal system are not good for workers and not good for employers,” he says. “But let’s be clear: this is about unfair dismissal.
“There’s nothing to stop you dismissing a worker fairly. If someone can’t do their job – or they behave inappropriately – or their role isn’t there for them anymore because you have to make them redundant, that’s all possible, you just have to follow a fair process and meet your legal responsibilities.”
Meanwhile Mark Ferguson MP, vice chair of the Labour Growth Group, says that while the “proposed changes to unfair dismissal are significant”, they will will protect workers “from being undercut by a minority of unscrupulous actors”.
The assurances offered by Brown and the Bill’s many supporters in Parliament will go some way to assuaging any fears held by larger employers, whose ranks of employment lawyers and HR officers could stymie any especially cynical claims. But the FSB argue that because of their scarce resources, the UK’s 5.5m small business remain vulnerable to – as Beaumont puts it – “vexatious” lawsuits.
“Employers will look at the risk and go, ‘Well, I’ve got this claim. It’ll cost me £10,000 to get rid of it and settle now if I’m up for that – or I can fight.’ And in many cases we risk seeing small businesses prefer to settle because they can’t wait years and they can’t afford the legal advice, even though they’ve got no guilt whatsoever.”
In Perks’ case, such a scenario would not only incur a heavy financial cost, but – just as worrying – would mean expending time and mental energy away from his storied aviation and defence clients; a scenario that Bass Rock can ill afford.
“We’re not experts in HR,” he says. “So it’s a high risk someone could see something we missed or forgot about and we’d be at the wrong end of a tribunal.”
Attempting to forestall the kind of backlash it has seen from the business community to its ill-fated National Insurance rise, the Department for Business and Trade has said it will create a new nine-month statutory probationary period. The move will give employees a state-imposed probationary period with a light-touch way for employers to make someone redundant, claims the department, which did not respond to a request for comment.
But the lack of clarity provided as to what this nine-month period will constitute, and the length of time it will take to legislate – the government has said it would not come in until August 2026 at the earliest – means the FSB’s Beaumont remains sceptical of its potential efficacy.
“We’re not convinced by it in the slightest,” he says. “It doesn’t feel genuine, because they seem determined to plough ahead with their day one rights move.”
Should – as Beaumont fears – the rumoured nine-month carve out fail properly to materialise – or were the UK’s stuttering, sluggish legislature to take more than 18 months deliver it – then evidence suggests that already-nervous SMEs will vote with their feat.
Perks is no exception, and should the workers’ rights Bill pass through Parliament unchanged, he will almost certainly renege on his plans to bolster Bass Rock’s ranks with a spate of new junior staff. “We’ll… change back to a safer recruitment model”, he says, “where we are recruiting highly-skilled and experienced people less often, rather than more inexperienced people to train up.”
Notwithstanding the fact his engineering firm’s prospects “remain ok for the moment”, the small business owner’s troubles extend beyond his own immediate circumstances.
“The message that really needs to get through is that small businesses are run by people, many of whom put their homes on the line” he says. “It may be fun and games to say we’ll bring in this legislation, but it affects real people in real ways.”
Additional reporting by Jessica Frank-Keyes