The government’s analysis suggests that employment rights reforms in the UK could potentially cost businesses up to £5bn annually. However, the changes are expected to benefit low-paid employees the most, with some shift workers possibly earning an extra £600 per year.
The reforms include adjustments to sick pay, paternity leave, zero-hours contracts, and administrative costs. While businesses will end up paying more, the government highlights the mental health and physical benefits to families and workers that could result in significant savings.
Deputy Prime Minister Angela Rayner emphasized in parliament that strengthening workers’ rights would lead to long-term economic growth. She stated that successful companies understand that robust employee rights lead to growth opportunities and that the new legislation would extend these protections to millions more workers.
On the other hand, Shadow Business Secretary Kevin Hollinrake expressed concerns that the costs associated with the reforms could potentially harm businesses, particularly those facing new employment claims. He criticized the bill, referring to it as a trade union charter rather than an employment rights bill.
Despite these concerns, the government downplayed the costs, stating that they are minimal compared to total employment expenses and that most of the expenses would involve redistributing funds from companies to workers. Business groups, however, warned about the additional financial burden on small and medium-sized firms, which form the backbone of the UK economy.
Shevaun Haviland of the British Chambers of Commerce highlighted the potential challenges faced by businesses and stressed the importance of avoiding rushed implementation of the measures. UKHospitality supported the bill but urged the government to consult closely with businesses to prevent unintended consequences, especially regarding zero-hours contracts.
The analysis identified a near-ban on zero-hours contracts as the most significant cost, amounting to up to £2bn. Additionally, the right to guaranteed hours and reasonable notice of shift cancellation could each cost £1bn. The government hopes that these changes will reduce the number of cancelled shifts, ultimately benefiting workers financially.
The reforms are projected to save workers money and provide greater job security. Additional costs include changes to statutory sick pay and new rights such as bereavement leave, day-one paternity leave, and unpaid parental leave. The Department for Work and Pensions estimates that these adjustments could cost employers around £400m annually.
Overall, the government argues that the benefits of the reforms, such as secure work and improved family life, outweigh the costs. The Trades Union Congress supports the changes, emphasizing that the economic and social gains far exceed the minimal costs for businesses. The reforms are expected to have a significant impact on companies that rely on low-paid and insecure employment practices.
