London, September 14, 2024 – British businesses are growing increasingly concerned about the tougher employment regulations that the newly elected Labour government is planning to introduce. According to the Confederation of British Industry (CBI), employers fear that the proposed measures could make it more difficult and risky to hire new staff, especially for small and medium-sized enterprises (SMEs).
Labour’s Employment Reform Proposals
During its election campaign, the Labour Party pledged to implement a series of employee protections, including parental leave, guaranteed minimum hours, sick pay, and protection from unfair dismissal. The government is now preparing the legislative framework to enact these promises.
Under current UK employment law, workers can be dismissed without a specific reason if they have been employed for less than two years. However, the proposed changes would offer more protection to employees from the moment they are hired, raising concerns among business owners about their ability to manage performance and dismiss underperforming staff.
Rising Caution Among Employers
The CBI’s annual survey, conducted in partnership with recruitment agency Pertemps, revealed that 75% of businesses are worried about the potential for employment tribunals challenging decisions made after probation periods. This concern is making employers more cautious about hiring new staff, particularly in smaller firms.
“While the government has said that businesses can use probation periods, the possibility of decisions at the end of probation being challenged at employment tribunal has 75% of respondents saying they’d be more cautious about taking on new staff,” said Matthew Percival, CBI Director for Work and Skills.
Future Concerns for Investment
The survey also found that 62% of employers expect the UK to become a worse environment for investment and business over the next five years. This reflects a 6% increase compared to last year in the number of businesses expecting conditions to deteriorate. Additionally, 39% of employers currently view employment regulation as a challenge, and this number is expected to rise to 58% in the next five years.
| Survey Results | Current | Future (Next 5 Years) |
|---|---|---|
| Businesses Concerned About Employment Regulation | 39% | 58% |
| UK Environment for Investment and Business Expected to Worsen | 62% | – |
Labour’s Goal for Higher Workforce Participation
The Labour Party has criticized the previous Conservative government for a drop in labour force participation post-pandemic. While the UK’s unemployment rate remains low at 4.1%, Labour is aiming to raise the labour force participation rate to a record 80% from its current 78.1%. Before the pandemic, the rate peaked at 79.5%.
The planned employment reforms are seen as part of Labour’s strategy to improve job security and worker rights, but the business community remains cautious, worried about the impact on hiring flexibility and investment conditions.
Key Keywords:
UK employment regulation, Labour government reforms, CBI survey, UK business investment concerns, probation periods, employment tribunal challenges, labour force participation
