Threatening labor law reforms are preventing companies from hiring new employees, a study shows

The majority (57 percent) of business leaders say they will be less likely to hire new employees as a result of the government’s planned workers’ rights laws. Research by the Institute of Directors has resulted.

Of the 715 UK companies surveyed about the impact of the Employment Rights Act on their hiring intentions, only 2.2 per cent said they were likely to hire more staff as a result, while more than a third (35.5 per cent) said it would have no impact.

The bill, which the Labour government plans to introduce by 12 October 2024, is expected to include the measures set out in the party’s statement. Plan to make the work pay off before the election. These include rights for workers to protection against unfair dismissal, parental leave and sick pay, as well as strengthening the legal rules on dismissal and re-employment.

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In addition, the Workers’ Rights Bill is expected to introduce flexible working hours as a standard right, along with employees’ rights to a contract that reflects their usual working hours.

Kathleen McAdams, director of Albany HR, said Human resources management The expected ban on zero-hour contracts could lead to a drop in recruitment in some sectors: “Some businesses, particularly hospitality and to some extent retail and manufacturing, have to deal with peaks and troughs in demand and [so] Zero-hour contracts are useful in these circumstances and some workers are quite happy with the flexibility they offer.”

She explained that companies that required flexibility in scheduling to maintain cost efficiency were more likely to provide poorer service and therefore require fewer staff.

Victoria Bamber, HR Operations Director at Limelite HR, said businesses’ caution was not surprising when viewed in the context of the significant challenges they have faced over the past four years, including Brexit, the pandemic, furloughs, strikes and the ongoing cost of living crisis. “Each of these disruptions has forced companies to navigate complex and evolving employment landscapes, often with unexpected costs and legal challenges,” she said.

“After enduring turmoil for so long, it is natural for businesses to be cautious about new government initiatives. Fear of further disruption or unforeseen challenges could make them hesitant, especially when their focus is on stabilizing operations, controlling costs and maintaining productivity.”

Bamber added that the government should create “stability” for businesses, especially smaller ones, and give them “clear assurances” to allay their concerns.

However, Simon Roderick, managing director of Fram Search, said: Human resources management “History is full of scaremongering about changes in labor law,” and this has not prevented workers from being given greater protection in the past.

“Companies can already make hybrid and flexible working arrangements without government mandating it, and if employers are not in line with the market, workers will vote with their feet,” he added.

The numbers are as follows Comments from Shadow Business Secretary Kevin Hollinrake To The Telegraph Last week it was said that businesses were “very afraid” of the Labour Party’s plans and that they would “make doing business in the UK more expensive”.

Hollinrake’s claims were a response to a newspaper report that the government wanted to give full-time workers stronger rights to compress their working hours to a four-day week.

However, a spokesman for the Ministry of Economy and Trade denied that this working time model was being imposed on employers. He explained that all changes to labor legislation would be discussed in consultation with companies.

Steve Nicholls, managing director of Executive Connexions, said the planned changes to employment law “do not necessarily have to be a bad thing” and “with the right support, companies can adapt and even succeed”.

“Flexible working hours, for example, have been proven to increase productivity and employee satisfaction, which can benefit everyone in the long run,” he said. “What we really need is more support from the government – be it financial help, clear guidelines or more time for companies to adapt.”

“The key is to find a balance between protecting workers and giving companies the confidence to hire new employees.”

Stay up to date with the Government’s proposed changes to employment law as part of its plan to Make Work Pay by using the CIPD’s tracker.