According to a survey by the Chartered Institute of Personnel and Development (CIPD), more than a third of UK employers plan to reduce permanent employment as a result of the government’s new employment rights reforms.
The survey of 2,000 companies found that 37 percent plan to reduce hiring of new core employees once the changes come into effect, while more than half expect workplace conflict to increase.
Employers warned that the new employment law, which introduces enhanced protections including statutory sick pay from day one, easier union recognition and a shorter qualifying period for unfair dismissal claims, could act as a “further handbrake on job creation”.
Government estimates suggest the legislation will cost businesses around £1bn a year. However, the CIPD said the official analysis may underestimate the real impact, particularly the additional time and administrative burden on human resources departments to implement the reforms.
Ben Willmott, head of public policy at the CIPD, said the changes could exacerbate pressures employers are already facing after employers’ national insurance contributions rose by £24 billion last year.
“There is a real risk that these measures will slow down recruitment even further,” he said, calling on ministers to meaningfully consult with business and consider compromises if necessary.
The survey found that 55 percent of employers expect more disputes once the reforms come into force. Companies raised concerns about the reduction in the waiting period for unfair dismissals from two years to six months, as well as new rights for zero-hours workers and expanded powers for unions.
Under the law, unions will gain increased access to workplaces for recruiting and organizing activities, while workers will benefit from expanded “day one” rights.
James Cockett, senior labor market economist at the CIPD, said the results differed sharply from the government’s expectations. The Whitehall impact assessment predicted that greater union involvement could reduce conflict, but only 4 percent of employers surveyed believed disputes would decrease.
The CIPD found that most British companies, particularly the 1.4 million micro and small employers, do not officially recognize trade unions. In this context, it is unclear how expanded union rights would significantly reduce workplace tensions.
The TUC welcomed the reforms, calling them the most significant improvement in workers’ rights in a generation and arguing they would improve dignity and wellbeing in the workplace.
Business groups, including the Confederation of British Industry (CBI) and the British Chambers of Commerce, have previously expressed reservations, particularly around guaranteed employment contracts, seasonal work and thresholds for industrial action.
The CIPD warned that some elements of the legislation could have unintended consequences. Changes to unfair dismissals, statutory sick pay and zero-hour contracts may result in some employers relying more on temporary or agency workers rather than permanent positions, potentially increasing employment insecurity.
As companies weigh the costs of compliance against economic uncertainty, the survey suggests the government faces a delicate balancing act between strengthening worker protections and sustaining job growth.
