British businesses are increasingly worried that the Labour government's proposed employee protection measures could increase the risks of hiring new staff, according
to the Confederation of British Industry (CBI).
During its election campaign, the Labour Party committed to introducing new policies that would require employers to offer all workers parental leave, guaranteed minimum working hours, sick pay, and protection from unfair dismissal. The government is currently working on drafting the relevant legislation.
Under current UK law, employers can dismiss staff who have been with the company for less than two years without needing to provide evidence of misconduct or poor performance.
However, a recent CBI survey, conducted in partnership with recruitment agency Pertemps, found that many small businesses are concerned these proposed changes could make it harder to dismiss underperforming new employees.
CBI’s director of work and skills, Matthew Percival, noted that despite government assurances that companies can still use probationary periods, 75% of respondents said they would be more hesitant to hire new staff due to the possibility of legal challenges after probation.
The survey also revealed that 62% of employers believe the UK will become a less attractive place for investment and business in the next five years, with 6% more employers now expecting conditions to deteriorate compared to last year.
Currently, 39% of employers see employment regulation as an issue, but 58% expect it to become a major concern over the next five years, according to the survey of 152 companies, most of which are small or medium-sized enterprises.
The UK’s unemployment rate is currently 4.1%, which is relatively low by historical standards. However, the Labour Party has criticized the previous Conservative government for the decline in labor force participation from record pre-pandemic levels. Labour aims to increase the labor participation rate to 80% of the working-age population, up from its current 78.1%. Before the pandemic, this rate had peaked at 79.5%. Photo by Phil Whitehouse, Wikimedia commons.