Blog by Kaitlyn Majkoski, Political Consultant for Science, Innovation and Technology, Culture Media and Sport, Employment, Retail and Gambling
The Employment Rights Bill, which is in the later stages of its passage through Parliament, is set to receive Royal Assent soon.
The Bill introduces sweeping changes to zero-hour contracts, guaranteed hours, unfair dismissal, and fire and rehire practices, with the Labour Party firm in its conviction that it will tip the balance towards workers.
On the reasoning for the Bill’s introduction to Parliament, Business Secretary Jonathan Reynolds said:
“Past Governments’ low growth and low productivity economy simply did not deliver what the UK needs, which is why we are choosing stability, investment and reform, not chaos, austerity and decline. This is why our mission to grow the economy as part of our Plan for Change is based on putting more money in working people’s pockets by making wages fairer and work more secure.”
However, the Bill has sparked considerable media debate, with strong voices emerging on both sides. Trade unions, led by the Trades Union Congress, herald the reforms to employment rights and the broader economy, while retailers, represented by the British Retail Consortium warn of its profound and potentially destabilising consequences. The friction of the Bill lies in its balance between improving job security and the operational requirement for flexibility in the retail sector.
The retail sector, a crucial pillar of the UK economy which employs over three million people, has responded with caution to the swift changes that the Employment Rights Bill proposes.
A chief concern are the problems the Bill poses to business flexibility, recruitment, and cost management for part-time and seasonal staff. These fears originate in the Bill’s proposal to introduce guaranteed hours for workers, which could undermine the retail sector’s ability to offer flexible part-time roles.
Under the Employment Rights Bill, employers must now offer a guaranteed-hours contract to those on zero-hour contracts based on the hours they submit during a 12-week period.
During seasonal peaks, retailers will often require more workers for a shorter period of time but the guaranteed hours proposals do not reflect this reality, requiring additional hours scheduled for periods of lower demand. This could also pose an issue with universities employing students, who often work during term time but prefer to go home when school holidays commence.
Commenting on the repercussions of the Bill on the retail industry, Helen Dickinson, Chief Executive at the British Retail Consortium, said:
“Almost 250,000 jobs have been lost in retail over the last five years and many major retailers have already announced further job cuts on the back of increased costs of employment which kicked in in April. Those in charge of retail hiring are clear – unless amended the Bill will make it even harder to keep and create jobs and reduce the flexibility that defines many existing retail roles.”
Some retailers are also cautious about planned trade reforms as there is widespread unease about potential increased business costs, which could result in rising prices for consumers and staffing cuts.
Retailers are wrapping their minds around how they will deal with the administrative burden and cost repercussion of the ERB’s new rules. A recent survey of HR Directors, as published by the British Retail Consortium, revealed that over 70 percent believe that the Bill will negatively affect their businesses, with fewer than 10 percent anticipating any positive impact. More than half believe it will lead to reduction in staff numbers and diminish job flexibility.
Cost pressures was another key concern, with over half of the HR Directors expecting the Bill to contribute to price increases, with none foreseeing it could lead to price reductions for consumers.
With the added context of the rise in employer National Insurance Contributions and the National Living Wage, a projected £5bn could be added to retailers’ costs.
On the other hand, trade unions have been particularly vocal on the transformative potential of the ERB to advance workers’ rights across the UK, except for Northern Ireland where employment is a devolved issue.
The Bill repeals large swathes of the Trade Union Act 2016, which created barriers for workers wanting to take industrial actions. Key reforms include expanding trade unions’ rights to access places of employment, obligation to notify workers of their right to join a trade union, better protection for trade unions representatives and members, and enhanced collective consultation rights.
The Trades Union Congress has cited a Cambridge University study that examined labour laws over the past 50 years, which found a clear pattern of robust employee representation laws being consistently linked to higher employment levels.
Furthermore, even though some employers recognise the right for their workers to join a trade union, certain companies have taken unnecessarily drastic steps to union-bust by pressuring workers to cancel union membership during the ballot period. The ERB would however allow trade unions to meet and recruiters to encourage collective bargaining for better benefits, pay, or hours.
Commenting on steps to modernise industrial relations, TUC General Secretary Paul Nowak said:
“Union-busting has no place in modern Britain. Corporate bully boys like Amazon throw everything at trying to stop workers from having an independent voice at work.
This Bill will help to stop these sorts of egregious tactics and will mean more workers benefit from a union voice.”
Once the Bill passes, trade unions are likely to focus on promoting workplace membership to secure formal recognition. The Labour Party views this recognition, which requires employers to engage in collective bargaining with unions over employment terms, as a positive step toward fostering cooperation between employers and unionised workers.
Furthermore, the Labour Party also sees Reform UK’s staunch opposition to the Bill as positive PR for the government, suggesting weakness in Nigel Farage’s assertion that he wants Reform to become the party of working people.
Indeed, according to polling from Hope Not Hate/TUC the measures in the Bill as it passes through Parliament have huge support from Reform voters and Reform-leaning voters.
Of course, this is not to say that Labour has been perfectly living up to the expectations of voters, but for now, trade unions see the Bill as an important first step toward giving employees, and citizens, more security and stability in their working life. Still, with employers divided, the Bill remains a political flashpoint in the battle over the future of work.