Businesses across Cambridgeshire and Peterborough are warning that the Government’s proposed Employment Rights Bill could still have unintended consequences for jobs, investment, and local growth if it proceeds without further change – but have welcomed several key amendments put forward in the House of Lords that would help to rebalance the legislation.
In a letter sent to all local MPs this week, the Cambridgeshire Chamber of Commerce said that while businesses support many of the principles behind the Make Work Pay agenda, the scale and pace of the proposed legislative changes risk adding significant cost, complexity, and uncertainty for employers – particularly small and medium-sized enterprises (SMEs).
According to the Chamber’s latest Quarterly Economic Survey, 85 per cent of businesses identified labour costs as a major price pressure, while the most recent Employer Skills Survey shows that 18.7 per cent of local employers had at least one vacancy in 2024, down from 25.2 per cent in 2022 – the lowest level since 2013.
Businesses have highlighted five areas of particular concern in the Employment Rights Bill:
- Dismissals during probation periods – Employers are seeking clarity over the proposed removal of the two-year qualifying period for unfair dismissal and the introduction of a statutory nine-month probation period. Businesses fear increased risk of tribunal claims without clear guidance on dismissal procedures.
- Statutory Sick Pay (SSP) – Removing the current three-day waiting period could lead to more short-term absences and higher costs, especially in sectors such as hospitality. Businesses are calling for SSP to begin from day two as a more balanced approach.
- Zero-hours contract reforms – The proposed 12-week reference period for calculating regular hours is seen as too short for seasonal industries. Employers recommend a minimum 26-week reference period to reflect fluctuating demand.
- Trade union thresholds – Lowering the thresholds for union recognition and industrial action could lead to increased disruption. Businesses believe the current balance between workers’ rights and business continuity should be maintained.
- ‘Fire and rehire’ provisions – Companies are concerned that new restrictions on varying contractual terms could make it harder to adapt to technological and economic change, limiting flexibility and competitiveness.
However, the Chamber said it strongly supports four key Lords amendments that would make the Bill more balanced and workable for both employers and employees. These include:
- Introducing a six-month qualification period for unfair dismissal, rather than protection from day one. This would provide employers with confidence to recruit and assess new staff, without the immediate threat of tribunal claims for issues such as underperformance or failure to pass probation.
- Reducing the burden on employers by removing the need to repeatedly offer guaranteed hours contracts to individuals who prefer the flexibility of zero-hours arrangements.
- Including a definition of seasonal work in the Bill, ensuring that employment patterns in industries such as tourism, hospitality, and agriculture are properly reflected when determining regular working hours.
- Retaining the 50% turnout threshold for industrial action ballots, so that any action taken reflects the will of a majority of union members and maintains stability for both businesses and employees.
A recent British Chambers of Commerce (BCC) survey of over 1,200 firms found that:
• 33% said proposed SSP changes would affect their recruitment plans
• 25% said zero-hours contract reforms would have a similar impact
• Over 80% felt the Government was not adequately consulting or assessing the real-world impact of its policies
• 69% viewed Government policy as one of the biggest barriers to business growth.
The Chamber warns that, combined with recent Employer National Insurance Contribution increases and ongoing skills shortages, the Employment Rights Bill could have a chilling effect on hiring and investment, undermining the Government’s Growth Mission.
Charlotte Horobin, CEO of Cambridgeshire Chamber of Commerce, said:
“Businesses want to see fair and modern employment law that works for everyone, but the current package of reforms risks doing more harm than good.
“We welcome the Lords’ amendments, which strike a more sensible balance between protecting workers’ rights and giving employers the flexibility to hire and invest with confidence. These changes are essential if we want to support job creation, productivity, and long-term economic growth.”
The Chamber has called on MPs to back these amendments and to continue pressing Ministers in the Department for Business and Trade and the Minister for Employment to ensure the final version of the Bill supports both workers and employers as it moves through Parliament.