Employment rights upgrades unveiled by the government yesterday (4 March, 2025) “could hit growth, employment, and the economy in general”, according to one HR professional.
The changes were revealed as part of amendments to the Employment Right Bill, ahead of it being discussed in the House of Commons next week (11 and 12 March, 2025).
A number of the amendments were expected, but the change to sick pay for low paid workers was less so, according to Steve Foulger, director of organisational transformation and people services at global people and insurance risk management firm NFP, part of Aon.
Foulger said the announcement of the SSP amendment is “likely to lead to a raft of impact analysis for HR professionals and businesses alike”.
Comparison with NI rise
He said: “The current marketplace is fragile. We are seeing numerous businesses having to make difficult decisions. The changes on the surface are good news for employees, but if it leads to higher costs for businesses, then ultimately it is the employees who will be hit. Like the national insurance changes, it could be a case of ‘be careful what you wish for’.
“As an HR professional it’s great to see employee rights increasing, but it is fair criticism that this could hit growth, employment, and the economy in general. Others will clearly say it doesn’t go far enough.”
‘Pro-employment effects’
However, Claire Costello, chief people and inclusion officer at the Co-op, said: “It’s our belief that treating employees well – a key objective of this bill – will promote productivity and generate the economic growth this country needs.”
Cambridge University professor of law Simon Deakin highlighted research from the university, which found that, on average, strengthening employment laws in the UK in the last 50 years has had “pro-employment effects”.
“The consensus on the economic impacts of labour laws is that, far from being harmful to growth, they contribute positively to productivity. Labour laws also help ensure that growth is more inclusive and that gains are distributed more widely across society.”
Ann Francke, chief executive officer of the Chartered Management Institute, said that many of the measures in the bill reflect what successful, responsible and forward-looking employers are already doing.
She said that the key to success will be the ability of skilled managers to implement these changes, ensuring they get it right and can deliver growth and productivity benefits for organisations while ensuring individuals are treated fairly.
“We look forward to working closely with the Fair Work Agency to ensure managers and leaders are equipped with the skills they need to navigate this milestone piece of legislation,” she added.
Careful implementation required
Nye Cominetti, principal economist at the Resolution Foundation, said that while all workers are covered by new rights and expanded sick pay, in reality low-paid workers stand to gain most as their job security is far lower than that enjoyed by middle and higher earners.
He also said: “The provisions being proposed will improve the quality of many people’s lives. But the scale of change they’d bring about in low-paying sectors like retail and hospitality means they should be implemented carefully.
“Workplace reform shouldn’t end with this bill either. These provisions should be reinforced by greater clarity over workers’ employment status, and better enforcement of workplace rights.”
Neil Carberry, CEO of Recruitment & Employment Confederation, said: “Regulating the umbrella market closes a loophole in addressing non-compliance. Recruiters have long called for regulations that ensure a level playing-field. Like all aspects of the government’s changes, proper enforcement will be key to protecting both businesses and workers.”
