NEWS & INSIGHTS

The Employment Rights Bill: A Political Tug-of-War with Real-World Consequences

Nick Dancer

Prime Minister’s Questions this week put the Employment Rights Bill (ERB) firmly in the spotlight, with the Leader of the Opposition, Kemi Badenoch, going on the offensive. She claimed the Bill will cost businesses £5 billion, contradicting the Prime Minister’s so-called “growth test.” Keir Starmer, in response, pointed to international comparisons and celebrated Heathrow’s third runway approval instead of addressing the concerns directly. It was a clear case of political positioning, but for businesses, especially those in the flexible labour market, this debate isn’t just about party politics, It’s about practical realities and confidence in an uncertain economy.

Are Business Concerns Being Pushed Aside?

Badenoch cited figures from the Federation of Small Businesses showing that 92% of small employers are worried about the ERB, particularly clauses 1-6, which she argued would make hiring riskier. Her key criticism was that this isn’t an ‘Employment Bill’—it’s an ‘Unemployment Bill’, hyperbole, perhaps, But the concerns behind the statement are real. Employers across the country, particularly in sectors that rely on temporary and flexible workers, are already hesitant about taking on new hires in the face of rising costs.

The Prime Minister’s response? Labour believes in “proper dignity and protection at work.” It’s a strong sentiment and one that we wholeheartedly share. However, businesses need more than sentiment—they need clarity and policy that supports both workers and the ability to create jobs.

A Bill for Workers or a Legal Headache?

One of Badenoch’s more cutting remarks was that the Bill would turn the workplace into an “adventure playground for lawyers.” She suggested that a new employee could start a job in the morning and take their employer to a tribunal that afternoon. Starmer dismissed this outright, but the concern remains—how will these changes alter the risk landscape for employers? If hiring someone comes with an immediate legal risk, does that make businesses more or less likely to offer opportunities, particularly to young or less experienced workers?

Then there’s the question of who actually benefits from the ERB. Badenoch argued that it’s not businesses, young workers, or taxpayers—it’s the trade unions. Again, there’s obvious political framing here, but it’s not just politicians who are asking this question. Many businesses are concerned that parts of the Bill focus more on shifting power dynamics rather than making employment fairer and more sustainable.

What It Means for the Flexible Workforce

For the contingent workforce, the devil is in the details. At FCSA, we’ve been pushing for greater clarity around how these reforms will apply to agency and umbrella workers. Policies designed for full-time, permanent employment often don’t translate well into the world of temporary work, and there’s a real risk that broad-brush changes could have unintended consequences.

We need to ensure:

  • Statutory sick pay rules don’t impose unfair costs on businesses that engage workers on a short-term basis.
  • Zero-hours contract provisions reflect the realities of flexible work and don’t discourage businesses from offering opportunities.
  • Redundancy protections are tailored so they make sense for temporary roles rather than adding unnecessary complexity.
  • Aggregated Benefits of being employed by a specialist payroll intermediary must be recognised in the Bill to ensure some workers are not made worse off.
  • Fair Work Agency (FWA) includes specialist payroll intermediaries  in its remit to enable FCSA to work with the FWA to protect workers and drive non-compliance out of our sector. 

FCSA is continuing to engage policymakers to try and make sure employment law evolves in a way that works for everyone—offering protection to workers without stifling job creation or pushing businesses towards non-compliant models.

What Happens Next?

This Bill is moving through Parliament at pace, having just recently concluded its Committee Stage in the Commons. However, there is still room to shape how it works in practice via Parliamentary Amendments and some of the detail is likely to be left to secondary legislation. FCSA is engaging with key stakeholders to make sure the final version supports fairness and flexibility in the labour market.

The ERB has become a political football, but its real impact goes far beyond Westminster. If the Government truly wants to balance protection with economic growth, it needs to listen to the businesses that will have to implement these changes, and right now, it’s not clear that’s happening.

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