With hundreds of new amendments made to the Employment Rights Bill this week, the CIPD is calling on the government to prioritise creating an implementation plan and clear guidance for employers, as research shows many expect the additional costs of new laws to lead to potential job losses and reduced hiring.
A CIPD survey of more than 2,000 employers finds that 4 in 5 (79%) organisations expect measures planned to be introduced in the bill – for example, changes to unfair dismissal rules, Statutory Sick Pay reforms and the right to guaranteed hours for those on zero hours contracts - to increase employment costs. Among employers that expect costs to increase because of the bill, the most likely ways they plan to manage this is through:
- Reducing the number of employees through redundancies and/or recruiting fewer workers (30%)
- Introducing or increasing automation (23%)
- Cutting back on training spend (22%)
- Reducing hours worked by staff (17%)
- Increasing the share of the workforce that is temporary (17%)
Changes to the rules on unfair dismissal and new rights for trade unions are amongst the areas of most concern to employers but there is still very little detail from government on these. The removal of the unfair dismissal qualifying period and the introduction of a new statutory probation period is the change most likely to see employers make redundancies, according to the CIPD’s research.
The CIPD also warns that the planned changes making it easier for unions to achieve recognition and access workplaces mean more emphasis will need to be placed on enabling both unions and employers to develop effective social partnership and employment relations skills.
In response to these employer concerns, the CIPD is calling on the government to consult meaningfully with employers on the details of measures still to be decided through secondary legislation. It is also highlighting the need for the early development of an implementation plan to provide both clarity and support, particularly for smaller employers that are most at risk of accidental non-compliance.
Peter Cheese, chief executive of the CIPD, the professional body for HR and people development, and attendee at the government’s tripartite meetings on the bill, comments:
“Our research shows that employers are already starting to seriously think about how the Employment Rights Bill could affect their workforce plans and costs, even without the full detail being clear and it not being implemented for at least another 12 months.
“It’s positive the government has committed to phasing in elements of the bill, with amendments this week underlining the complexity of the changes facing employers. It’s essential that businesses, and smaller firms in particular, have adequate understanding and time to prepare for the changes. The success of the bill depends on effective consultation, a clear implementation plan, appropriate support and proper enforcement. Without this, there is a risk that new laws which the government hopes will improve working lives, could have the unintended consequences of undermining job creation and efforts to boost labour market participation and growth.”
The CIPD is warning that the scale and complexity of measures in the bill could compound challenges facing many employers following recent increases in employer National Insurance costs, the National Living Wage and business rates.
As well as rising costs, there is also the risk of accidental non-compliance amongst businesses, especially smaller firms with fewer or no HR resources, which will put pressure on an already over-stretched tribunal system. The government’s own impact assessment on the bill estimated a 15% increase in employment tribunal claims as a result of the bill’s measures.
As part of an effective implementation plan, the CIPD has highlighted the importance of additional resources for Acas, the Central Arbitration Committee and the employment tribunal system in its recent spending review submission, to cope with the expected increase in employer demand for guidance and the rise in tribunal claims.
When asked which forms of support would be most helpful to help them manage the impact of the Employment Rights Bill, employers said:
- Guidance from the government on implementing the changes (40%)
- A third (33%) said guidance from professional bodies, such as the CIPD, in implementing measures in the bill
- A third of employers (34%) said training materials for HR and managers
- 31% said support in developing policy to align with legal requirements, highlighting the important role of HR in understanding the new legislative requirements and how they impact policies and practices at work.
On a positive note, 32% of employers expecting costs to rise, plan to try and raise productivity and improve efficiency in response. However, 42% said they planned to raise prices, a quarter (26%) report they will cancel or scale down plans for investing in or expanding the business, and the same number expect to reduce the rate of basic pay growth for the rest of the workforce, outside those benefiting from increases to the National Living Wage.
