Employment Rights Bill impact assessment cites “positive but small” direct potential for economic growth

The Impact Assessment showed that the package could “help to raise living standards across the country and create opportunities for all.”
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The Government’s Employment Rights Bill returned to Parliament yesterday, as its Impact Assessment showed that the package could have “a positive but small direct impact on economic growth,” and could “help to raise living standards across the country and create opportunities for all.”

The assessment added that “many of the policies within the Employment Rights Bill could help support the Government’s Mission for Growth.”

Last year, the country saw the highest number of working days lost to strikes since the 1980s – costing the economy millions of pounds.

The Employment Rights Bill has reached its second reading, alongside a package of consultations to help inform its next steps.

This included a consultation on the approach to Statutory Sick Pay, where the Bill will be removing the waiting period and the Lower Earnings Limit.

The Government outlined that 2.4 million people in the UK work irregular patterns like zero or low hours contracts or agency jobs, where insecure hours can mean expensive childcare or transport costs.

New protections within the Employment Rights Bill, like guaranteed hours and reasonable notice or compensation for lost work could help shift workers keep up to £600 a year.

Deputy Prime Minister Angela Rayner said: “We’re delivering real change for working people across the country, while driving our mission for growth and making people better off.

“Successful firms already know that strong employee rights mean strong growth opportunities.

“This landmark legislation will extend the employment protections given by the best British companies to millions more workers.

“We said we would get on and deliver the biggest upgrade to rights at work in a generation and the growth our economy needs – and that is exactly what we are doing.”

Business Secretary Jonathan Reynolds said: “From our very first day in office, this Government has moved to restore security for working people.

“That principle runs throughout this legislation and ensuring that employee rights are fit for a modern economy, empower working people, and contribute to our central mission of economic growth.

“Make no mistake – a pro-worker economy is a pro-business economy.

“This legislation will deliver a new deal for working people. It will help fix our broken labour market.

“And it will tackle the poor pay, poor working conditions and poor job security that have been holding our economy back.”

The Plan to Make Work Pay was developed in partnership with both businesses and trade unions, and the Government will continue to work with stakeholders on how best to implement these commitments.

The Impact Assessment set out further details on how the new measures will create a level playing field for all businesses, raising standards and helping stop the undercutting of good employers. 

It will also make flexible working the default in order to support higher workforce participation and allow more opportunities to employ a wider pool of talent.

There could also be benefits offered to workers in sectors such as hospitality, who make up around 20% of low-paying jobs and account for a disproportionate amount of economic activity in areas of central Scotland, North Wales and Southwest England.

Finally, the Bill will create a right to bereavement leave following the death of a loved one, which could benefit up to two million people a year.

The analysis also confirmed costs to business would represent under 0.4% of total employment costs across the economy.

As part of the Government’s Plan to Make Work Pay the waiting period for Statutory Sick Pay (SSP) will be removed as well as the Lower Earnings Limit.

These changes will ensure SSP is available to employees from day one of their sickness absence and is available to all employees, regardless of their earnings.

A consultation will seek views on what percentage rate should be paid for those earning below the current rate.

Alongside reforms in the Bill, the Government is consulting on several changes to the industrial relations framework.

The Government is also focusing on strengthening remedies against abuse of the rules on collective redundancy and ‘fire and rehire’.

This consultation will ask for views on increasing the maximum period for the protective award in cases where employers have not complied with collective redundancy rules, and adding interim relief to collective redundancies and unfair dismissals in fire and rehire scenarios.

Work and Pensions Secretary Liz Kendall MP said:Millions of employees across the UK who can’t immediately get sick pay if they are too unwell to work deserve better.

“People should not have to choose between earning a living at work or getting better at home – the changes we want to see will allow employees to do both and businesses to get on.

“We are now asking for your views on the rate of sick pay for low earners, as we fix our broken labour market and the poor pay and working conditions that have been holding our economy back.

“As set out in Next Steps to Make Work Pay, this package is just the first step as we look to engage all stakeholders on how to best put our plans into practice, with further consultation to come in the months ahead. The majority of reforms are expected to take effect no earlier than 2026.”

Paul Nowak, general secretary at the TUC, said: “Everyone who works for a living deserves to earn a decent living – and to be treated with dignity and respect.

“The Employment Rights Bill is an opportunity to make work pay for millions and to give working people vital rights and protections.

“We urge MPs from all parties to support this Bill and to be on the right side of history. It’s time to turn the page on the low-pay, low-rights and low-productivity economy of the last 14 years.

“Driving up employment standards is good for workers and good for business. It will allow people more control and predictability over their working lives – and stop decent employers from being undercut by the bad.”

Michelle Ovens CBE, founder of Small Business Britain, said: “Small business owners are rarely against additional rights for their staff, so this is unlikely to deter them from hiring.

“Indeed they often exceed regulations to offer flexible local employment opportunities that deliver value beyond simply creating work.

“It must be remembered that the proposed Employment Rights Bill does include protections for employers – such as a lighter-touch process for fair dismissal so employers can continue operating probation periods.

“However, any changes must consider the squeezed budgets and resources small businesses have.

“We look forward to working with the Government to ensure owners have the support they need to navigate new processes and feel confident that they can meet the costs over the long term.”

Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said: “The Government consultations on the Employment Rights Bill offer a crucial chance for business and labour market experts to engage on the detail of how the proposals will impact flexible work.

“In particular, we welcome the opportunity to offer feedback on how agency work interacts with zero hours contracts. We asked for this and the Government have listened.  

“In delivering the Government’s plan to Make Work Pay, we must ensure the views of the full range of workers are taken into consideration and that the protections and opportunities currently afforded to many, for example to agency workers, are in no way jeopardised or put into conflict with future legislative changes.”

Zarah Choudhary

Zarah Choudhary is a Reporter for Workplace Journal and The Intermediary

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