The Federation of Small Businesses (FSB) has come out swinging this week, warning the Government that the Employment Rights Bill could “wreak havoc on our already fragile economy.”
As James Hurley writes: “One of the most radical changes is the planned removal of a two-year qualifying period for protections from unfair dismissal. Other changes that are concerning some small employers include granting new rights on sick pay from day one of employment.”
The Bill, due to return to Parliament for further debate, has sparked widespread concern. Entrepreneurs across our network have voiced serious reservations, which we’ve communicated to the Government. Finding the right balance is crucial to prevent widespread negative impacts.
The FSB’s numbers are stark: two-thirds of surveyed small companies indicate the plans would restrict their hiring capabilities, while one-third anticipate reducing their workforce before the measures take effect in 2026. The CIPD’s recent survey of over 2,000 employers reinforces these concerns: 32% are cutting headcount through redundancies or reduced recruitment, while 24% are either cancelling or scaling back business expansion plans.
The government’s own analysis projects annual costs to businesses in the billions. This economic burden won’t remain contained to businesses alone - an imbalanced approach risks creating exactly what the legislation aims to prevent: fewer and less secure jobs. Beyond job cuts and reduced hiring, the legislation may inadvertently encourage employers to shift toward temporary, casual, and self-employed workers.
The government doesn’t need to back down on every measure. A case can be made for fairer compensation for last-minute shift cancellations, appropriate bereavement leave for workers, and reforms to the practice of fire and rehire.
However, history demonstrates that sustainable workers’ rights improvements are intrinsically linked to economic growth. Economic expansion periods have consistently driven dramatic improvements in wages and job quality, enabling major advances in workers’ rights – from minimum wage laws to union rights and reduced working hours.
The Government doesn’t need me to tell them we’re not expanding now. That’s why in the final three months of last year, 32% of small employers expected to reduce staff, up from 17% in the previous quarter, while the proportion of companies looking to hire fell from 14% to 10% over the two quarters.
Now’s the time to double-down – nay, triple-down – on its pivot to growth.
Sovereign Albion
In a thought-provoking Substack article, friend of the Network Andrew Bennett advocates merging scientific and technological advancement with a renewed connection to British land, lore, and folk traditions. He backs our proposal to create a new chivalric order for innovation, but it’s mostly worth reading for a fresh perspective on thinking about progress. It also serves as an antidote for thinking too much about employment regulation!
Ecosystem Builders
Our good friends at the Global Entrepreneurship Network invite you to apply to join the UK delegation at the Global Entrepreneurship Congress (GEC) in Indianapolis.
The GEC brings together over 5,000 global leaders – entrepreneurs, investors, policymakers, academics, and support organisations – for four days of intensive networking, workshops, and keynote presentations. Find out more on their website and this deck.
The UK delegation, led by Marc Ortmans and Matt Smith, currently comprises 35 members with plans to expand to over 60. Contact Matt Smith to learn more and receive a GEC registration fee waiver code.
Pitch in Parliament
Startup Coalition (also friends of the Network) will be hosting a Pitch in Parliament on 17 March. They’re looking for startups that have raised over £500,000 and are solving a problem in Public Services with AI. Find out more.