The UK’s five largest business groups have written a joint open letter urging the Government to revise its new Employment Rights Bill, warning it could harm growth during economic uncertainty.

The bill, which is due to be examined by the House of Lords this month, would introduce several key changes. These include a legal right to guaranteed hours, a crackdown on zero-hour contracts with no work offer, and new restrictions on “fire-and-rehire” practices. Workers would also gain new rights from day one, such as statutory sick pay, protection from unfair dismissal, parental leave, and the right to request flexible working.

While broadly supportive of the Government’s ambition to raise productivity, wages and working standards, the British Chambers of Commerce, Confederation of British Industry, Institute of Directors, Federation of Small Businesses, and Make UK warn that the Bill, in its current form, could discourage hiring and limit flexibility.

In their rare joint statement, the organisations said fixed-hours guarantees might backfire, making employers less likely to hire new staff, especially those with less experience or in more precarious roles. They also raised concerns about a potential rise in employment tribunal cases and an increased administrative burden.

The Government maintains the legislation represents “the biggest upgrade to workers’ rights in a generation”, but the Office for Budget Responsibility has yet to factor it into forecasts, citing a lack of available detail.

The business groups have called on the Government to consider adjustments before the Bill progresses.

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