Small firms fear the Employment Rights Bill will harm recruitment and increase benefit claims (Image: Getty)
Keir Starmer has been urged to scrap parts of the Employment Rights Bill after nine out of 10 employers claimed it will see them recruit less staff this year.
The Federation of Small Business said its survey found that 92 % of small employers were worried about the , with 67 % saying they plan to recruit fewer staff, and 32 % are set to reduce the number of staff they arleady have.
The FSB warned that as a result the Government’s benefits bill is set to soar, with a majority less likely to hire those out of work or with a poor work history.
The UK’s largest small business group is now calling on the Prime Minister Kier Starmer to scrap its plan to expand grounds that would allow employees to sue for unfair dismissal from their first day of work.
show that the unfair dismissal proposals could lead to a 15 % rise in legal action, which would mean an extra 20,000 complaints, 4,750 more employment tribunal cases and 875 additional cases which may require a full hearing.
One of the main concerns among small busiensses is the changes to unfair dismissal legislation, which would expand the grounds for employees to take their new employer to a tribunal from their first day in the job.
FSB says that the Prime Minister must now show he “gets” the importance of creating and sustaining jobs by scrapping this part of the Bill, returning instead to the one-year qualifying period in place under the last Labour Government.
Tina McKenzie, FSB’s policy chair, 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. The economy is in no fit state for a ‘war on work’.
“If employers fear they will be sued, fewer will hire – with knock-on effects including a rising benefits bill and a lasting drag on living standards across the UK.
“These changes would have a severe negative impact on the real economy. All those who will be locked out of work as a result of this Bill deserve better from the Government.
“Removing new rules on day one dismissal processes from the Bill altogether, and returning to the one-year qualification period in place under the last Labour Government, is a more balanced approach and a cost-free route for the PM to show he gets it on the importance of creating and sustaining jobs.”
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The FSB’s survey was conducted by the research agency Verve between 14 November and 26 November. A total of 1,270 small business employers were polled.
Small employers said that the Bill would see them:
- Recruit fewer staff (67%)
- Cancel or scale down plans for investing and expanding in the business (56%)
- Reduce headcount before the measures kick in (32%).
People out of work or with a poor job history are set to be especially hard-hit, with small employers saying they will:
- Change their recruitment or employment practices (87%)
- Avoid hiring those with a poor work history (66%)
- Avoid hiring those out of work or who haven’t had a job before (33%).