Employment Rights Bill Could Harm UK Business Growth

The looming introduction of changes under the government’s Employment Rights Bill has sparked deep concern across the facilities management sector. In an open letter to Sir Keir Starmer, Deputy Angela Rayner and Business Secretary Jonathan Reynolds, 128 companies have issued warnings about the potential “serious unintended consequences” of the legislation. These include industry leaders such as OCS Group, Churchill Group, and Mitie.

The proposed reforms include provisions such as granting protection against unfair dismissal from the first day of employment, increased union representation, and more generous sick pay mandates. Businesses argue these changes could result in significant operational costs, estimated to add £5 billion annually to the economy. Smaller businesses, already operating on tight margins, are expected to feel a disproportionate impact. Some fear this could lead to cutting staff hours, reducing headcounts, or even withdrawing from the market entirely.

Dominic Ponniah, CEO of commercial cleaning firm Cleanology and co-author of the letter, described the increase in costs as a significant blow, exacerbated by April’s rise in employers’ national insurance contributions to 15 per cent. He suggested that companies are now “feeling the hit on their bottom lines” and are eager to express their concerns before it is too late.

The facilities management sector, which employs 1.4 million people and contributes £60 billion to the UK economy annually, plays a vital role in keeping hospitals, train stations, airports, offices, and other critical infrastructure running. Yet, businesses argue the proposed reforms risk penalising fair employers while failing to eliminate malpractice among less reputable firms.

Despite supporting efforts to tackle exploitative labour practices and improve conditions for agency workers, companies question the feasibility of implementing these costly measures in the current economic climate. Many argue that without reducing the UK’s significant employment tribunal backlog, these legislative changes might fail to deliver the intended benefits while burdening firms with further complications.

As most provisions under the bill are deferred until next year, businesses are calling on the government to reconsider before irreversible damage is caused. With inflation, rising taxes, and operational costs already straining budgets, firms in the sector warn the new reforms could jeopardise jobs and stifle economic growth.