IoD press release Targeted changes to the Employment Rights Bill would significantly boost business confidence
In response to historically low levels of business confidence and ONS/HMRC data showing a sharp decline in employment in December, 41% of business leaders believe that a significant scaling-back of the government’s employment law reforms would make a major difference to business confidence in 2025.
The IoD has identified key changes to the Employment Rights Bill which, in the view of its members, would significantly soften the negative impact of the reforms on hiring.
Specifically, the IoD is calling on the UK government to:
- Amend the planned introduction of additional protections against unfair dismissal so that they only come into effect after six months of employment, rather than on day one.1
- Increase the planned reference period for the entitlement to guaranteed hours to 52 weeks, and make it a right for employees to request, rather than to be proactively offered, a contract reflecting hours regularly worked.2
- Retain one waiting day before employees can access Statutory Sick Pay (SSP).3
- Retain existing thresholds for statutory recognition of trade unions.4
Alexandra Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said:
“The reforms contained in the Employment Rights Bill, coupled with upcoming rises in Employers’ National Insurance Contributions and the minimum wage, have had a demonstrably damaging effect on employers’ hiring intentions by increasing the costs and risks associated with hiring. Our data shows that employer hiring intentions remain around lows reached in 2020.
“The important work of reinforcing quality jobs must not squeeze out employment opportunities. IoD research has identified key areas of the reforms which are of particular concern to employers. We would therefore encourage government to act quickly on these concerns to restore business confidence in hiring.”
Further detail regarding the IoD’s proposals:
- The Bill removes the existing two-year qualifying period before an employee can claim ‘ordinary’ unfair dismissal at a tribunal. The IoD proposes that the qualifying period be shortened to six months, to give employers the confidence that they can correct hiring mistakes without risking lengthy and expensive tribunal cases.
- The Bill requires employers to proactively offer guaranteed hours to zero-hours and low-hours workers, calculated based on their typical working hours over a reference period (likely 12 weeks). The IoD proposes that the reference period for this right should be set at 52 weeks to ensure that it takes account of seasonal fluctuations in demand. Furthermore, the IoD proposes that this change should give employees the right to request, rather than be automatically offered, such a contract. This would minimise the significant and unnecessary bureaucracy which would result from employers having to offer such contracts to employees with no interest in taking them up.
- The Bill removes the waiting period for Statutory Sick Pay (SSP), meaning that employees can claim SSP from the first day of their sickness absence. In order to ameliorate the impact of change in this area on sickness absenteeism, the IoD proposes that the number of waiting days be changed to one (from the existing three).
- The Bill allows regulations to reduce the membership requirement needed to make an application for trade union recognition from the current level of 10% to as little as 2%. It also removes the requirement for a union to demonstrate that a majority of workers are likely to support recognition and removes the need for a recognition ballot to achieve the support of at least 40% of the bargaining unit. The IoD proposes that existing thresholds for statutory recognition of trade unions be retained, to ensure that recognition reflects the democratic will of a majority of the workforce.
Full Results
687 responses from across the UK, conducted between 13-30 January 2025. 15% ran large businesses (250+ people), 19% medium (50-249), 22% small (10-49 people), 31% micro (2-9 people) and 13% sole trader and self-employed business entities (0-1 people).
At the start of 2025, business confidence in UK economic prospects stands at historically depressed levels. Which of the following would do most to boost business confidence in 2025? Please choose up to three.
