U.K. Employers Raise Alarm Over Labour’s Proposed Employment Regulations

The Confederation of British Industry has expressed concerns about the Labour government’s proposed employee protections, fearing they could negatively impact the business and investment climate in the U.K.

Many employers in the U.K. are apprehensive about the Labour government’s plans for providing additional employee protections — fearing new policies will make it difficult to hire or fire staff — according to a new survey.

The Confederation of British Industry (CBI) published new findings in its annual employment trends survey, revealing more than half (62%) of employers say the proposed measures could negatively impact the country’s business and investment climate over the next five years.

“While business recognizes the objectives of many of these reforms, the lack of detail about how they will be achieved has created damaging uncertainty,” Matthew Percival, CBI Future of Work and Skills Director said. “Businesses are concerned that achieving these goals in the wrong way risks significant unintended consequences for growth and for workers.”

Among the Labour Party’s proposed changes are mandatory parental leave, guaranteed minimum hours, sick pay, and protection against unfair dismissal. Reuters reports that currently employers can dismiss staff without proving misconduct or poor performance within the first two years of employment. This flexibility is set to change, causing concern among employers who fear heightened risks and regulatory challenges.

The CBI survey reveals that 75% of employers indicated they would be more cautious about hiring due to the possibility of employment tribunal challenges at the end of probation periods. Smaller businesses, in particular, expressed widespread concern about the difficulty of dismissing underperforming new hires.

With the U.K.’s unemployment rate currently at a low 4.1%, the Labour Party’s policies are seen as pivotal to addressing participation rates, but may come at the cost of increased regulatory burdens on businesses.

The survey found other major most perceived risks include: “skills gaps (71%), labor shortages (58%) and labor costs (56%).”

The survey arrives as British businesses prepare for regulatory changes, weighing their potential impact on the job market and future investment decisions. With more than half of employers fearing negative impacts on the business and investment climate, these changes could influence how many companies’ approaches to workforce planning and recruitment strategies — making the labor market more competitive for job seekers.