Labour’s New Employment Bill: Are We Really Ready?

As a business owner, I always welcome changes that promise to improve the workplace, but the Labour government’s approach to the new Employment Bill concerns me. While some may see it as a step forward for workers’ rights, it’s creating unease for employers like me and you when the focus should be on making the economy flourish, not hampering it with more red tape.

Yes, the new bill promises significant changes. Labour has committed to delivering the largest uplift in workers’ rights in a generation, and to their credit, they seem serious about this. However, despite the 150-page legislation published, there are still significant gaps in the details. The bill has yet to be passed, and many of the provisions won’t even come into effect until 2026—so much for 100 days, more like 1,000 days of waiting for complete clarity.

For small businesses, like fish and chip shop owners or restauranteurs, who are already feeling the pinch, these changes could spell trouble. Many of us are concerned that Labour’s well-intentioned proposals come with bureaucratic hurdles that may actually stifle growth. It feels like a tightrope between keeping businesses afloat and giving workers the protections they deserve.

Zero-hours contracts and Flexibility

Take zero-hours contracts, for example. Kate Nicholls, Chief Executive of UKHospitality, made a crucial point when she said, “One of our primary messages during a long period of dialogue with Labour in opposition and in government was to recognise the importance of flexibility to both workers and businesses, and I’m pleased it has done that today. However, these changes are not without cost.”

Nicholls stresses the importance of zero-hours contracts in the hospitality sector, and I agree with her. Many people—up to 90%, according to a House of Commons briefing—prefer this type of contract for its flexibility. Labour’s plan to force regular contracts on businesses after 12 weeks of regular hours could disrupt this balance. Why remove that choice for employees who actually want it?

Yes, we need to stamp out exploitative practices, but Labour needs to ensure that their solutions don’t end up backfiring on the very workers they are supposed to protect.

A Shift in Workers’ Rights

The promise of day-one rights for sick pay, parental leave, and unfair dismissal sounds great in theory. Yet, this creates a burden for small businesses that don’t have extensive HR departments. The Federation of Small Businesses rightly pointed out that these new requirements might discourage companies from hiring at all. If hiring new employees becomes riskier and more costly, growth could stall, and that’s bad news for everyone.

Introducing a statutory probation period is supposed to ease these concerns, but even that’s not without contention. Labour’s suggestion of a nine-month probation period feels arbitrary, and it’s clear that businesses are pressing for longer while unions want no probation period at all. The back-and-forth consultation that Labour is encouraging only delays clear, decisive action. And in business, uncertainty is the last thing we need.

Consultation or Chaos?

While necessary, Labour’s consultations with unions and businesses feel like an exercise in stalling. As one participant in these talks told the BBC, there’s been engagement with a broad range of groups but little genuine consultation. Is the government listening, or are they just trying to keep everyone happy on the surface?

The reality is that there are still many unanswered questions behind the scenes. Labour will continue to consult on key issues long after the bill is passed, and many critical changes won’t come into effect until years down the line. Even new protections against unfair dismissal won’t kick in until autumn 2026.

In the meantime, businesses are left in limbo. Businesses need certainty, not vague promises of future changes. We need to know what to expect now to plan for the future. But as it stands, Labour’s bill doesn’t offer us that assurance.

Can Labour Truly Be Pro-Business?

While Keir Starmer’s Labour has tried to position themselves as pro-business and pro-worker, the balancing act is showing cracks. Can Labour be the party of business when proposing changes that could make hiring new staff riskier?

At the end of the day, I want my business to thrive, but this constant feeling of uncertainty makes it hard to focus on growth. Labour needs to stop creating unease for employers and start helping companies to thrive. Only then can we build an economy that works for everyone.

Want to dive deeper into the potential impact of Labour’s Employment Bill? Read our full article, which breaks down the changes and explores how they could affect your business.