As the UK government prepares to unveil significant employment reforms, concerns arise among business leaders about the potential impact on hiring practices and economic stability.
Concerns Emerge Over Potential Impact of UK Employment Reforms
This week, the UK government is set to unveil the Employment Rights Bill, a set of reforms that aims to enhance workers’ rights significantly. These developments, which will be announced on Thursday, include provisions allowing employees the right to request flexible working hours from the first day of employment. Additionally, workers will gain an entitlement to statutory sick pay from the onset of illness and the capability to lodge unfair dismissal claims after a probationary period of six months instead of the current two years. Furthermore, the reforms aim to crack down on zero-hours contracts that have been a contentious issue in employment discourse.
However, these sweeping changes have prompted concerns among some sectors regarding their impact on hiring practices. Business leaders and legal experts have voiced apprehensions that these changes may inadvertently make it more challenging for job seekers, as companies might respond by freezing recruitment efforts to mitigate additional obligations associated with hiring.
Helen Crossland, a Partner at law firm Seddons, highlighted potential unintended consequences of the bill, suggesting that enhanced rights could lead businesses—particularly small enterprises—to limit permanent hiring. Instead, firms might lean more towards utilising temporary workers, extending overtime to current employees, or leveraging artificial intelligence to manage workloads efficiently.
A report from the Recruitment and Employment Confederation (REC) has illustrated an existing reluctance among firms to employ new staff amid economic uncertainties. The report noted a decline in candidates placed in permanent roles, a trend continuing over the past two years. The sentiment was echoed by Neil Carberry, Chief Executive of REC, who observed that, while permanent job placements saw a decline, the temporary hiring market displayed more resilience. He noted that private sector vacancies have largely stagnated, suggesting businesses are adopting a cautious approach.
The hospitality sector, represented by voices such as Kate Nicholls, Chief Executive of UKHospitality, underlined the importance of these reforms accommodating flexible job roles that appeal to students and single parents. Nicholls emphasised the need for ongoing discussions with the government to ensure that the proposals do not inadvertently limit access to flexible employment opportunities.
The government, through a spokesperson from the Department for Business and Trade, stated that the majority of employers are in favour of strengthening day-one employment rights. They noted the necessity of balancing protections against unfair dismissal while maintaining the use of probation periods for evaluating new staff.
These developments come amidst wider economic concerns, exacerbated by uncertainties surrounding government decisions on taxation and industrial strategy, as detailed in a survey by KPMG and REC. The survey indicated that the hesitance in hiring stems partly from unclear government policies, which have made companies wary. Permanent placements in September slightly edged up from August but remained below the threshold that would signify stable employment activity.
In tandem, the KPMG/REC report reflects ongoing concerns about the UK economy, compounded by fears of tough fiscal decisions in the approaching Budget. This economic climate has seen a decrease in sectors like retail, construction, and technology, while demand remains for roles in the medical and care sectors.
Chancellor Rachel Reeves has been attempting to reassure the public and businesses, signalling a focus on investment rather than austerity in the forthcoming Budget. The attention remains on the government for a clear industrial strategy that ensures economic stability and provides clarity on the upcoming employment law reforms.
As the Employment Rights Bill approaches its official introduction, its impact on the UK labour market is likely to be closely monitored by both policymakers and business leaders.
Source: Noah Wire Services
