UK Businesses Wary of Hiring Amid Proposed Workers' Rights Overhaul

Angela Rayner's proposed employment rights bill is causing significant apprehension among UK businesses, with a majority indicating a reduced likelihood of hiring new staff. This development comes as the Labour government approaches its self-imposed deadline for introducing the legislation, set for October 2024.

The Institute of Directors (IoD), an organization representing company directors and senior business leaders since 1903, conducted a survey revealing that 57% of executives are less inclined to hire due to the anticipated changes. Only 2% suggested they might increase their workforce, while a third expected no impact.

The proposed reforms include:

• "Basic rights" for workers from day one, including sick pay
• Empowering staff to disregard emails outside regular working hours
• Banning "exploitative zero-hours contracts"
• Granting employees more authority to request flexible working, including a four-day week

These changes reflect a growing global trend towards improved work-life balance and employee protections. The concept of a four-day work week, for instance, has gained traction internationally, with several countries and companies experimenting with this model.

Alexandra Hall-Chen from the IoD expressed concern that the new legislation could deter employers from expanding their workforce. She emphasized the need for the government to engage meaningfully with businesses to ensure its growth mission is not compromised.

The proposed reforms come at a time when the UK's productivity growth has been sluggish since the 2008 financial crisis, affecting wage growth. This situation has intensified debates about workers' rights and employment status, particularly in light of the growing gig economy.

"Business leaders are concerned about the impacts of the proposed new reforms on the cost of employing staff."

Adding to the complexity, the Low Pay Commission has recommended a 6% increase in the minimum wage, potentially raising it above £12 an hour for the first time. This advisory body, established to provide guidance on the National Minimum Wage and National Living Wage, may suggest an even higher figure following Labour's mandate to ensure a "genuine living wage."

The concept of a "living wage" has its roots in the late 19th century in both the United States and United Kingdom, reflecting long-standing concerns about fair compensation for workers.

Business groups, including the British Retail Consortium (BRC), have warned that higher wages could put investment at risk. Tom Ironside of the BRC highlighted that retailers face increasing business costs, including rising business rates and fees. The UK's business rates system has long been criticized for placing a disproportionate burden on physical retailers.

As the October 2024 deadline approaches, the government faces the challenge of balancing workers' rights with business concerns. This task is particularly complex given the UK's evolving employment landscape, influenced by factors such as the gig economy's growth and the legacy of EU employment legislation.