An alarming number of businesses have become increasingly concerned about the future of the UK’s workforce under the new Labour government’s employment reforms. 

A fresh survey of 1,270 small employers by the Federation of Small Businesses (FSB) has revealed over 90 per cent are worried about the implications of the Employment Rights Bill. 

A majority of those also cited fears of lawsuits due to unfair dismissal legislation, which falls under the day one rights’ proposals included in the Bill. 

As a result, some 67 per cent plan to halt recruitment efforts in the new year, with 32 per cent planning to subsequently reduce current headcount. 

Over half of those employers said they also feel the need to cancel or scale back investment on expansion plans in the new year.

“Small firms have made it crystal clear that the Bill will not motivate them to hire more whatsoever,” Tina McKenzie, FSB policy chair, said, adding that the feedback is “emphatic, resounding, and overwhelming.” 

A call for change

The small business lobby group has urged the government to make changes to the bill, including the removal of plans for day one dismissal processes.

Returning to the previously allocated one-year period allows for a “balanced approach and cost-free” solution, it said. 

“Ministers must show they get the risk to jobs and avoid a cavalier, dogmatic or patronising approach to the loud and clear feedback from small businesses,” McKenzie said.