London businesses broadly welcomed Government plans for an overhaul of workers’ rights but warned that the capital’s hospitality industry could suffer “unintended consequences”.
The Government published its Employment Rights Bill after months of discussion with unions and employers, both before and since the election in July.
It includes plans to restrict exploitative zero-hours contracts and “unscrupulous” fire-and-rehire practices.
There will be consultations on a new statutory period for a worker to qualify for protection against unfair dismissal. Currently they have to wait two years.
Kate Nicholls, chief executive of UKHospitality, welcomed the lengthy consultations done already by ministers.
She told the Standard: “For many of the 600,000 people that work in hospitality in London, the flexibility the sector offers is incredibly important and we’re pleased that the Government has recognised that in its Employment Rights Bill.
“Protecting the right for employees to access zero-hours contracts is crucial and evidence of how engagement with businesses can deliver for both employees and businesses, while also tackling any exploitative use of those contracts. That continued consultation will be critical moving forwards.
“Of course, these changes are not without cost and all eyes will now be on the Budget to see how the Chancellor supports businesses funding this through pro-growth policies, such as introducing a lower business rates for hospitality businesses,” Ms Nicholls.
BusinessLDN spokesman Sanjay Odedra said: “Hopefully we’ll see some positive mood music on that when the consultation period ends, to set clear timeframes and to work with businesses on practical details about the new probation period.
“The challenge we see is if employers don’t have clarity around that, firms could be taken to tribunals for unfair dismissal enduring that new period, which will only drive up costs and add to the backlog in courts.”
Analysis cited by House of Commons researchers shows that people on zero-hours contracts are more likely to be female, aged 16-24, and working in the accommodation and food sectors in London and the South East.
Under the legislation, employers will have to offer a guaranteed hours contract based on a 12-week reference period.
Workers on zero-hours contracts will also be entitled to a reasonable number of shifts and financial compensation if a shift is cancelled or cut short.
Deputy Prime Minister Angela Rayner said: “After years of stagnation under the Tories, we’re replacing a race to the bottom with a race to the top, so employers compete on innovation and quality.
“It’s by making work more secure and modernising workplaces that we will drive up productivity, improve living standards, generate jobs and investment, and pave the way for sustained economic growth that benefits working people,” she said.
Most unions also welcomed the plans. GMB General Secretary Gary Smith said: “This is a significant and groundbreaking first step to giving workers the rights they’ve been denied for so long.”
But Conservative shadow business secretary Kevin Hollinrake said the 28 reforms envisaged in the legislation were "really damaging”.
“And that's not me speaking. That's the Federation of Small Business, the CBI [Confederation of British Industry] and many others,” he said on Times Radio, accusing Labour of giving a reward to its union backers.
“It's simply wrong. It's ill thought through, and is going to cost jobs,” Mr Hollinrake added.
For the CBI, Chief Executive Rain Newton-Smith said the Government “deserves credit for its willingness to engage with businesses and unions”.
“It’s that willingness to work together that can ensure we find the right landing zone and improve living standards by avoiding the unintended consequences that businesses have warned against.”
