The Government’s Employment Rights Bill went through its second reading on Tuesday. The bill has been branded the “biggest upgrade to workers’ rights in a generation” by Deputy Prime Minister Angela Rayner.
It aims to put an end to “exploitative” zero hours contracts, giving workers the right to a contract that reflects their regular shift patterns following a 12-week probation period.
Workers on zero-hours and low hours contracts will have the right to payment for shifts cancelled at short notice.
It also guarantees rights to sick pay, bereavement leave, and paternity leave from day one.
Proud to see Secretary of State @AngelaRayner introducing the second reading of the Employment Rights bill as ‘a lifelong, proud trade union member’.
’Too many working people have had to wait too long for change. This government led by working people, for working people, will… pic.twitter.com/9ZdP3P1sQr
— UNISON – UK's largest union (@unisontheunion) October 22, 2024
Business costs
Ensuring such rights comes at a cost to businesses. Labour’s impact assessment of the bill estimates that the policies will amount to a direct cost of £4.5 billion to businesses annually.
According to the assessment, the costs will be derived from the delivery of worker benefits, familiarisation with employment law, as well as a loss of flexibility for employers that use zero hour contracts in accordance with their business demands.
Labour says that these costs only demonstrate a 0.4% increase to what businesses already spend on employment. The party has also highlighted that small and micro businesses will be disproportionately hit by the costs.
Passing on the costs
“Having a business in Central London is killing us”, says the owner of an independent Greek restaurant in Farringdon.
She anticipates eventually closing down, as she feels the landscape for small businesses in London has worsened particularly since Covid-19. Over the past couple of years she has had to cut her staff from 17 to nine.
To deal with the changes, she anticipates making further cuts to staff. Moreover, she is worried about closing down in the near future.
Contracts reflecting seasonal work?
Employment lawyer Darren Newman says he wonders how the right to contracted hours will work in practice during the busier months.
Workers recruited around October, a particularly busy time for the hospitality industry, may work twelve of the busiest weeks of the year.
Following this probation period, a contract will have to guarantee and reflect those hours.
Ali, the assistant manager of an independent pub in Central London, feels worried about how this could affect the business during the quieter months after Christmas and summer.
It is unlikely, she says, that she would be able to commit to giving the same shifts in these quieter periods as in the busier periods.
Ali does not feel as though the independent pub would be able to cope with the changes as well as large hospitality chains, who, she says, can afford to cover those costs – “it will hit small businesses quite hard I think”.
Labour has said it does not want to create a “two-tier” workforce and must ensure that all workers have access to the same rights.
Paul Nowak, General Secretary of the TUC has said that the bill is good for workers, business and the wider economy. He described the business costs as negligible and expects them to be offset by social and economic gain.
“These changes will mostly affect those companies whose business models have been built on low-paid, insecure payment.”
Paul Nowak
Conservative Shadow Business Secretary Kevin Hollinrake urges that the bill requires more reflection. He warns that businesses and the economy do not need “the threat of being sent back to the 1970s”, dealing with “zero-warning strikes”, referring to the bill’s reforms to Trade Union access to the workplace.
The bill is yet to go to committee stage where it will be read in detail by a committee of MP’s.
