{"id":241944,"date":"2024-10-22T13:31:37","date_gmt":"2024-10-22T13:31:37","guid":{"rendered":"https:\/\/dominiclevent.com\/blog\/?p=241944"},"modified":"2024-10-22T13:31:37","modified_gmt":"2024-10-22T13:31:37","slug":"employment-rights-reforms-could-cost-uk-businesses-5bn-a-year-employment-law","status":"publish","type":"post","link":"https:\/\/dominiclevent.com\/blog\/employment-rights-reforms-could-cost-uk-businesses-5bn-a-year-employment-law\/","title":{"rendered":"Employment rights reforms \u2018could cost UK businesses \u00a35bn a year\u2019 | Employment law"},"content":{"rendered":"\n
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Employment rights reforms could cost businesses up to \u00a35bn a year, according to the government\u2019s own analysis, which also found the changes will benefit low-paid employees the most, with some shift workers potentially earning an extra \u00a3600 a year.<\/p>\n

In the analysis the government acknowledges that businesses will end up paying more, including for changes to sick pay, paternity leave and zero-hours contracts as well as on administrative costs.<\/p>\n

However, it found that many of the mental health and physical benefits to families and workers would save significant sums.<\/p>\n

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Speaking in parliament before the bill\u2019s second reading on Monday, the deputy prime minister, Angela Rayner, said that most employers were already complying with the changes stipulated in the bill<\/a>.<\/p>\n

She said the strengthening of workers\u2019 rights would help the economy grow long-term: \u201cSuccessful 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.\u201d<\/p>\n

The shadow business secretary, Kevin Hollinrake, said the costs \u201ccould sink\u201d some businesses, particularly those hit by new employment claims. \u201cThis is not a employment rights bill but a trade union charter,\u201d he said.<\/p>\n

The government said the costs were minimal \u2013 less than 1.5% \u2013 when compared with total employment costs and that most of the cost would represent a redistribution from companies to their workers. Total wage costs in the UK were \u00a31.3tn in 2023.<\/p>\n

Business groups said they risked being \u201cburied under a mountain of additional cost\u201d and cautioned against rushing the measures through.<\/p>\n

Shevaun Haviland, of the British Chambers of Commerce, said: \u201cThe cost burden will fall hardest on the millions of small and medium-sized firms which are the backbone of the economy.<\/p>\n

\u201cBusiness anxiety is already growing ahead of next week\u2019s budget. We share the government\u2019s desire to see sustained economic growth and are committed to working with them to reach that target. But that can\u2019t happen if businesses are buried under a mountain of additional cost.\u201d<\/p>\n

UKHospitality, which represents pubs, hotels and restaurants, welcomed the bill, but its chief executive, Kate Nicholls, called on the government to \u201cget the details right, through close consultation with businesses to avoid unintended consequences\u201d. She said zero-hours contracts were the desired contract for 90% of people on them, who wanted flexibility.<\/p>\n

A near-ban on zero-hours contracts is the biggest cost, totalling up to \u00a32bn. The government said the right to guaranteed hours could itself cost up to \u00a31bn \u2013 much directly passed on to workers \u2013 and the right to reasonable notice of shift cancellation could also cost \u00a31bn.<\/p>\n

The analysis said that the government \u201cexpect[s] that business behaviour will change so fewer shifts are cancelled, but the value of unavoidable cancellations could still be as high as \u00a3120m a year\u201d.<\/p>\n

The change is projected to save workers significant money \u2013 not just payment for shifts missed but for the costs of extra wasted childcare or transport, labelled \u201cthe insecurity premium\u201d. The government said that could be \u00a3600 a year for some, worth over \u00a3250 more a year than the last two national insurance cuts.<\/p>\n

The analysis found it would cost about \u00a3100m to enforce the right to unfair dismissal claims from day one of a new job, though it was likely the policy would reduce the risk to employees of switching jobs.<\/p>\n

Based on current patterns, the new rights could also lead to a significant rise in mediation or legal action \u2013 an increase of about 15%, which would mean an extra 20,000 additional complaints to the Acas mediation and arbitration service, 4,750 more employment tribunal cases and 875 additional cases which may require a full hearing.<\/p>\n

Other costs likely to be incurred are up to \u00a31bn in the changes to statutory sick pay, and about \u00a3100m in costs each for new rights such as bereavement leave, day one paternity leave and unpaid parental leave. Department for Work and Pensions analysis suggests the extra payments made by employers are expected to cost about \u00a3400m a year.<\/p>\n

In the analysis, the government said there were benefits that could not be easily quantified in terms of secure work and a more well-rounded family life. It said that 17m working days were lost due to stress, depression or anxiety, equivalent to more than \u00a35bn of lost output in a single year.<\/p>\n

Ministers and the Trades Union Congress have argued that the reforms are popular with voters. The TUC\u2019s general secretary, Paul Nowak, said: \u201cDespite repeated attempts to paint this bill as bad for business, this rigorous impact assessment shows that the business costs are negligible and are more than offset by the wider economic and social gains.<\/p>\n

\u201cThese changes will mostly affect those companies whose business models have been built on low-paid, insecure employment.\u201d<\/p>\n<\/div>\n\n

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