While intended to help minimum to low wage workers, the government’s Employments Rights Bill – set to be implemented over the next two years – will, many argue, hurt small businesses the most, with critics warning the legislation will increase unemployment and kill growth.

Labour’s proposed overhaul of workers’ rights could cost businesses up to £5bn annually, according to the government’s own impact assessment. 

The changes, including restrictions on zero-hours contracts and improved sick pay, are said to have a disproportionate effect on the small businesses that employ 13 million workers across the UK. The report, however, describes this cost as “modest”, equating to less than 1.5 percent of total staffing expenditure, with projected wellbeing benefits valued at £3bn – not taking into account the negative wellbeing of business owners. 

What’s modest to a bunch of political figures, many of whom have never run a small business of their own, is a serious threat to survival to the majority of small business owners that do depend on the success of their business for their livelihoods.

And for them, modest is almost certainly not an option – not least when they’re told by professional politicians on six figure incomes to suck it up….well, you know where you can stick your modest?

Indeed, critics argue the changes could have unintended consequences. Tina McKenzie, policy chair at the Federation of Small Businesses, said: “As bad as these impacts seem, they still underestimate the real costs this legislation could have on growth and participation.”

Shadow Business Secretary Kevin Hollinrake was equally sceptical, urging the government to reconsider the proposals. 

“The government should look again at its growth-killing bill, at the very least exempting small and medium-sized companies from these disastrous measures,” he commented.

The report also warned of broader economic risks, suggesting the additional costs could force employers to cut jobs, hindering economic growth. While the government maintains that the reforms will bring significant benefits for workers in sectors like hospitality, its Employments Rights Bill risks turning those workers into job seekers. Business owners, on the other hand, will have their work cut out. The increase in employer’s national insurance, followed by a rise in employment costs, could leave many struggling to find the benefits of being a job creator – a role the new government seems to take for granted. 

‘Tis no country for small business owners.