More than two thirds of small employers plan to recruit fewer staff, while close to a third expect to reduce headcount this year, citing concerns about the government’s Employment Rights Bill.
The research, from the Federation of Small Businesses (FSB), showed that 92 percent of small employers are concerned about the impact of the Employment Rights Bill, with 67 percent saying they plan to recruit fewer staff, and 32 percent set to cut jobs.
The FSB also warned that the government’s benefits bill would soar as the majority of small employers reported they were less likely to hire people out of work or who have not previously had a job (33 percent) or with a poor work history (66 percent).
More than half (56 percent) of small employers also warned that the bill would prompt them to cancel or scale down plans for investing in and expanding the business.
The federation urged prime minister Keir Starmer to scrap the parts of the bill that would enable employees to bring an unfair dismissal claim from their first day of work.
Starmer must now show he understands the importance of creating and sustaining jobs by removing this part of the bill and returning to the one-year qualifying period that was in place under the last Labour government, the employer body said.
Tina McKenzie, FSB policy chair, said: “Small firms have made it crystal clear that the bill will not motivate them to hire more whatsoever. Their feedback is emphatic, resounding, and overwhelming.
“Ministers must show they get the risk to jobs and avoid a cavalier, dogmatic or patronising approach to the loud and clear feedback from small businesses. The economy is in no fit state for a ‘war on work’.
“If employers fear they will be sued, fewer will hire – with knock-on effects including a rising benefits bill and a lasting drag on living standards across the UK.
“These changes would have a severe negative impact on the real economy. All those who will be locked out of work as a result of this bill deserve better from the government.
“Removing new rules on day one dismissal processes from the bill altogether, and returning to the one-year qualification period in place under the last Labour government, is a more balanced approach and a cost-free route for the prime minister to show he gets it on the importance of creating and sustaining jobs.”
