The UK government is seeking compromises on parts of its landmark workers’ rights legislation as employers redouble calls for changes to some of its more contentious elements to remove obstacles to economic growth.
Two government figures said ministers were preparing to put forward amendments to the employment rights bill — a sweeping set of reforms designed to give workers more security and boost the role of unions — in response to concerns raised by business over recent weeks.
“There are some things we will never agree on, some business groups didn’t want this legislation in the first place,” one of the people said. “But we are looking for consensus, we are listening to their concerns in the light of the Budget. They are pushing at an open door.”
Ministers remain intent on delivering the reforms set out in their plan to “Make Work Pay”, one of the most ambitious parts of Labour’s election manifesto that has so far gone through parliament without big changes.
But the government is under pressure to reassure business it can still deliver economic growth, following a sell-off in gilts that has put in question Rachel Reeves’ ability to meet her fiscal rules without more tax rises.
Employers are increasingly worried about the cost of implementing new rules on top of changes to taxation and the minimum wage announced by the chancellor in the October Budget, after the bill was introduced.
“Business confidence has fallen, economic growth isn’t there. There is a moment to say . . . let’s revisit this,” said Craig Beaumont, executive director at the Federation of Small Businesses.
The CBI business group has said ministers are nearing a “crunch moment”, where they can bring forward government-backed amendments to alter parts of the bill that could otherwise have unintended consequences for workers.
Ministers are looking at changes to address concerns that some of the measures could place burdens on business that were never intended, without benefiting workers, according to the two government figures.
One change would be to ensure big employers did not have to consult workers on redundancies at different sites if they were unrelated, so businesses were not “stuck endlessly consulting on small changes”.
Officials said secondary legislation would address another concern that a new duty to compensate workers for shifts cancelled at short notice might apply when employers were simply checking who might fill a gap in their rota.
But there is no sign yet that ministers will be receptive to bigger demands to revisit the principles underpinning the bill or rewrite key provisions.
The CBI, the British Chambers of Commerce and manufacturers’ group Make UK all fear the bill will hand too much power to trade unions, significantly lowering hurdles for winning collective bargaining rights and taking strike action.
They also say a clampdown on contentious “fire and rehire” practices goes too far, obliging businesses to be on the point of insolvency before they can force through any changes to contracts.
The business groups want a rethink of new protections for zero-hours contract workers, arguing that employers should be obliged to meet requests for a contract that reflects regular working patterns, but not to offer one to all those potentially eligible.
The FSB is also challenging one of the bill’s key provisions: the right to protection from day one against unfair dismissal. It maintains that even with provisions allowing for probation periods, employers will not have enough protection against vexatious claims that could take years to come to a tribunal.
Changes to the primary legislation in these four areas would be big concessions that would be strongly opposed by unions.
However, the effect of many measures will depend on details of their implementation, which are to be set out later in regulations. Business lobbyists hope to soften the impact of key measures, including the so-called ban on zero-hours contracts.
One question yet to be settled is how long a “reference period” is needed to establish workers’ entitlement to regular hours when moving from a zero-hours contract.
Business groups say the 12-week period suggested is not long enough to allow for seasonal fluctuations. The CBI wants a year’s data to be used where available, while others advocate six months.
Government officials are considering ways to keep the headline 12-week figure while allowing employers to factor in peaks and troughs owing to weather or holiday periods.
A bigger sticking point is the government’s resolve to extend the ban on zero-hours contracts to agency workers.
Neil Carberry, chief executive of the Recruitment & Employment Confederation, said both options consulted on by ministers to achieve this goal were unworkable.
“The government have a goal of 80 per cent employment,” he told a parliamentary committee this week. “I have to tell you right now that is not going that well in the labour market.”
The Department for Business and Trade said the employment rights bill was “a crucial part” of the government’s “mission to grow the economy”.
The department added that it had “already engaged extensively with businesses and unions” and “look[ed] forward to more engagement and consultation in the coming months to ensure the bill works for workers and employers alike”.
