Labour's workers' rights reforms face backlash from business chiefs

Business leaders warn of economic downturn and rise in unemployment

Labour's proposed workers' rights reforms have sparked criticism from business chiefs, who warn that the changes could stifle economic growth and lead to a surge in unemployment. The Deputy PM Angela Rayner's Employment Rights Bill has come under fire for being described as "clumsy and chaotic" by small firms.

Fears of hiring freeze and economic inactivity

Bosses have expressed concerns that the legislation may prompt a hiring freeze, with Tina McKenzie from the Federation of Small Businesses criticizing the Bill as rushed, poorly planned, and lacking pro-growth elements. The proposed reforms are slated to take effect in Autumn 2026 and aim to grant Day One rights to workers.

Immediate rights for 30 million workers

Under the Bill, 30 million workers would have immediate rights to paternity, parental, and bereavement leave. Additionally, statutory sick pay would commence from the first day, and working from home would become the default position. The reforms would also provide zero-hours staff with the right to guaranteed hours contracts.

Opposing views on the reforms

While some, like tech entrepreneur Euan Blair, caution against focusing solely on past issues, others, including Business Secretary Jonathan Reynolds, believe the reforms will offer more security to workers. However, Shadow Business Secretary Kevin Hollinrake criticized Labour for rushing the legislation to appease union interests despite facing opposition.