The CIPD is urging the government to provide clarity for employers as new amendments to the Employment Rights Bill are unveiled.
With hundreds of changes made to the Bill this week, the professional body for HR and people development has called for an implementation plan and clear direction for organisations, warning the extra cost of new legislation could result in reduced hiring and redundancies.
A survey carried out by the CIPD showed nearly four in five (79%) employers are expecting their expenses to rise due to measures such as unfair dismissal rule changes, statutory sick pay reforms and the right to guaranteed hours for workers on zero-hours contracts.
Of those polled who anticipate higher costs, the ways they are most likely to manage this is by reducing their headcount through redundancies and/or recruiting fewer people (30%), implementing or increasing automation (23%), reducing training spend (22%), cutting staff hours (17%) and increasing their proportion of temporary workers (17%).
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The areas most concerning for employers were cited as the changes to unfair dismissal rules and new trade union rights, although the CIPD highlighted that the government has yet to provide much detail about these.
According to the survey, the amendment most likely to result in redundancies is the removal of qualifying period for unfair dismissal claims and the implementation of a new statutory probation period.
The CIPD has warned that making it easier for unions to gain recognition and enter workplaces will mean both unions and employers needing help to develop an effective social partnership and employment relations skills.
It is urging the government to engage in meaningful consultations with employers on the specifics of measures that will be determined through secondary legislation. It also wants the prompt development of an implementation plan to offer clarity and support, especially to smaller employers who are most vulnerable to unintentional non-compliance.
CIPD chief executive Peter Cheese, who attended the government’s tripartite meetings on the bill, said: “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.”
Cheese believes that the success of the bill will rely 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,” he added.
The CIPD also believes that the scale and complexity of the bill’s measures could compound the challenges already faced by many organisations following recent hikes in employer National Insurance costs, business rates and the national living wage.
To ensure effective implementation, the CIPD stressed the need for extra resources for Acas, the Central Arbitration Committee, and the employment tribunal system to manage the anticipated rise in employer requests for guidance and tribunal claims.
Employers polled expressed their preferences for support in response to the Employment Rights Bill, with 40% seeking government guidance on implementation, 33% looking to professional bodies like the CIPD for guidance, 34% requesting training materials for HR and managers, and 31% needing assistance in developing policies aligned with legal requirements.
While 32% of employers plan to boost productivity and efficiency to counteract rising costs, 42% intend to increase prices, 26% will reduce or halt business expansion plans, and 26% will slow the rate of basic pay growth for employees not benefiting from National Living Wage increases.
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