Small firms say new employment rights making it more difficult to dismiss people will hit recruitment and fuel the government’s benefits bill.
The Federation of Small Businesses (FSB) says two in three (67 percent) of its members plan to recruit fewer staff, and one in three (32 percent) will cut numbers.
One of the main concerns cited in the Bill is changes to unfair dismissal legislation, which would expand the grounds for employees to take their new employer to a tribunal from their first day in the job.
The measure was promoted by deputy prime minister Angela Rayner – however the FSB is calling for a U-turn by returning to the one-year qualifying period in place under the last Labour Government.
The survey also found that 56 percent of small employers would cancel or scale back investing and expanding their businesses.
The FSB said employers would be increasingly unlikely to take on people who are out of work or with a poor job history. Some two in three (66 percent) said they would avoid hiring those with a poor work history.
Tina McKenzie, the FSB’s Policy Chair, said: “Small firms have made it crystal clear that the Bill will not motivate them to hire more whatsoever. Their feedback is emphatic, resounding, and overwhelming.
“Ministers must show they get the risk to jobs and avoid a cavalier, dogmatic or patronising approach to the loud and clear feedback from small businesses. The economy is in no fit state for a ‘war on work’.
“If employers fear they will be sued, fewer will hire – with knock-on effects including a rising benefits bill and a lasting drag on living standards across the UK.
“These changes would have a severe negative impact on the real economy. All those who will be locked out of work as a result of this Bill deserve better from the Government.”
She added: “Removing new rules on day one dismissal processes from the Bill altogether, and returning to the one-year qualification period in place under the last Labour Government, is a more balanced approach and a cost-free route for the PM to show he gets it on the importance of creating and sustaining jobs.”
