A third of small businesses expect to cut jobs in the near future due to fears that the government’s upcoming workers’ rights package will leave them facing painful tribunals and a higher sick pay bill.
A fresh survey from the Federation of Small Businesses (FSB) shows that in the fourth quarter of last year, 33 per cent of small employers said they expect to reduce their headcount; nearly double the 17 per cent planning redundancies in the previous three months.
Similarly, fewer businesses are looking to hire. Just 10 per cent of small business bosses are making plans to take on more staff, compared with the 14 per cent between June and September.
Small- and medium-sized enterprises (SMEs) are set to find themselves on the sharp end of some of the sweeping reforms to workers’ rights that is making its way through Parliament as part of the Employment Rights Bill.
The overhaul – which includes outlawing so-called ‘fire and rehire’ practices and ending ‘exploitative zero-hours contracts’ – has triggered a slew of warnings from bosses and business groups.
They argue that its promise to give workers protection from unfair dismissal “from day one” could make their firms the targets of “vexatious” lawsuits that could last up to two years if they refuse a costly settlement.
Tina MacKenzie, policy chair at the FSB, said: “The figures speak for themselves – plans to allow employees to sue their employers on their first day on the job will wreak havoc on our already fragile economy, while changes to Statutory Sick Pay will make employers think twice about their hiring plans.”
The Trade Unions Congress has previously praised the workers’ rights package as a “much-needed” piece of legislation. But a survey conducted by the FSB – published towards the end of last year – found over 90 per cent of their members were concerned about the some or all of the changes. And three quarters voiced fears relating to unfair dismissal changes.
MacKenzie added: “If taking on staff becomes a legal minefield, businesses will simply stop. That means more people on benefits, a ballooning welfare bill, and a devastating hit to living standards. Those who will be shut out of work because of this Bill deserve better from the Government.”
A spokeswoman from the Department for Business and Trade said: “This Government has delivered the biggest upgrade to people’s rights at work in a generation and our measures already have strong support from business, as well as overwhelming public support.
“As we deliver our plan to make work pay, we will ensure all businesses have their say and are given the time to prepare for any changes as we deliver our pro-business, pro-worker agenda.”