Small businesses could be hit with higher costs under new employment rights plans, according to Whitehall’s own assessment of the legislation.
The Employment Rights Bill is getting its second reading in Parliament at the moment, giving MPs their first chance to debate the main points of the plans in the Commons.
Within the bill are a series of reforms branded the biggest overhaul in a generation, including granting workers protection from unfair dismissal from the first day of their employment, the right to statutory sick pay from the first day of illness and the right to flexible working.
An economic analysis published by the Department for Business and Trade has claimed the bill will “strengthen working conditions for the lowest-paid and most vulnerable in the labour market”.
But, it also found that “delivering those benefits will place a direct cost on employers”.
The document predicts that the costs to businesses will be in the “low billions of pounds per year” but those that rely on low-paid workers or employees on flexible contracts could see the changes “be more disruptive”.
Costs will be “proportionately higher” for small and micro businesses because of the “fixed costs of admin and compliance burdens”, the document states.
Asked about the economic analysis, which suggested the draft law would cost businesses a maximum £4.5bn, Deputy Prime Minister Angela Rayner said the assessment also makes clear that it would benefit more than 10 million workers.
“And the money in their pockets will go back into the economy and will support businesses, in particular, those on the high street,” she added.
“It will be the Labour Government that delivers for the working people of this country.”