British businesses are concerned that the enhanced employee protections proposed by the newly elected Labour government could make it riskier to hire new staff, according to the Confederation of British Industry (CBI) on Sunday.
During its election campaign, Labour promised to mandate employers to provide all staff with parental leave, guaranteed minimum hours, sick pay, and protection against unfair dismissal. The government is currently drafting specific legislative proposals.
Under existing law, employees with less than two years of service can be dismissed without the employer needing to demonstrate misconduct or poor performance. The CBI reported that an annual survey of employers, conducted in partnership with recruitment agency Pertemps, revealed significant concerns among smaller businesses about the difficulty of dismissing underperforming new hires.
"While the government has mentioned that businesses can utilize probation periods, the possibility of probation decisions being challenged at an employment tribunal has led 75 percent of respondents to say they would be more cautious about hiring new staff," said Matthew Percival, CBI's work and skills director.
The CBI also found that 62 percent of employers anticipate Britain becoming a less attractive place to invest and conduct business over the next five years, driven by a six percentage point increase since last year in those expecting conditions to worsen significantly. Employment regulation is currently a concern for 39 percent of employers, but 58 percent expect it to become a problem within the next five years, according to the survey of 152 businesses, two-thirds of which are small or medium-sized.
Britain's unemployment rate stands at 4.1 percent, historically low, but the Labour Party has criticized the previous Conservative government for allowing the labor force participation rate to decline from its record pre-pandemic levels. Labour aims to boost the labor force participation rate to a record 80 percent of the working-age population, up from the current 78.1 percent. Prior to the pandemic, the rate reached a peak of 79.5 percent.
