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92% of small employers concerned about Employment Rights Bill, plan to cut hiring, survey finds

The Bill has raised fears that it will harm recruitment and drive up the Government’s benefits bill.

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92% of small employers concerned about Employment Rights Bill, plan to cut hiring, survey finds
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The majority (92%) of small employers are concerned about the Employment Rights Bill, with many planning to reduce hiring, according to a survey by the Federation of Small Businesses (FSB).

The Bill, which includes significant changes to unfair dismissal laws, has raised fears that it will harm recruitment and drive up the Government’s benefits bill.

One of the main issues highlighted by respondents was the expansion of grounds for employees to sue for unfair dismissal from their first day on the job.

Small employers argued that this change would make it more difficult to manage their workforce, and could increase the likelihood of facing legal challenges.

The FSB called on the Prime Minister to scrap this particular provision and revert to the one-year qualifying period for unfair dismissal that was in place under the previous Labour Government.

Two-thirds (67%) indicated that they would be less likely to hire new staff due to the changes.

Moreover, 56% of employers said that they would cancel or scale down plans to invest or expand their businesses as a result of the proposed legislation.

In addition, 32% of small employers revealed that they would reduce their headcount before the new measures come into effect.

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The majority (87%) of small businesses signalled that they would change their recruitment and employment practices in response to the Bill.

Two-thirds (66%) would be less inclined to hire individuals with a poor job history, and 33% would avoid hiring those who are currently out of work or have never had a job.

Tina McKenzie, policy chair at FSB said: “Small firms have made it crystal clear that the Bill will not motivate them to hire more whatsoever.

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“Their feedback is emphatic, resounding, and overwhelming.

“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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