Angela Rayner workers' rights laws 'mean lower pay and more strikes'

Angela Rayner's Employment Rights Bill is a "stealth tax" on employees that will lead to lower wages, critics claimed. The legislation, to be debated in the House of Lords on Monday, will give workers more rights in the workplace but cost businesses up to £5billion every year. A new analysis warned that the cost would ultimately be paid by employees.

Len Shackleton, professor of economics at the University of Buckingham, said: "Politicians love to announce new employment 'rights' because they think employers pay the bill - but that's an illusion. Every mandate, from parental leave to holiday entitlements, acts like a stealth tax that gets passed back to workers through smaller pay rises than they would otherwise receive." He warned: "The Employment Rights Bill will make this much worse, imposing billions in hidden costs that workers will ultimately bear themselves. The Government is not protecting workers - it is harming them and undermining its own alleged number-one priority to boost economic growth."

The comments were backed by Andrew Griffith, Shadow Business and Trade Secretary. He said: "The so-called Employment Rights Bill is nothing more than a Trojan horse for union power and state interference."

In a report published by Institute of Economic Affairs, Mr Shackleton warned that the new laws championed by the Deputy Prime Minister could revive 1970s-style trade union militancy and damage economic growth, which is already in reverse, after the economy shrank by 0.1% in May and 0.3% in April.

The legislation gives workers new rights from day one of employment, such as the ability to claim unfair dismissal, currently available after two years, or unpaid parental leave, currently available after one year.

It also creates a new "fair work agency" to seek out infringements of employment regulations even if no staff member has made a complaint.

Unions will also gain new powers, including the right to enter employer premises and use a company's electronic communications to recruit members.

The legislation will make strike action easier, scrapping rules introduced by the last Conservative government that required at least a 50% turnout in industrial action ballots in order for industrial action to be approved. It also removes a rule that required at least 40% of the total membership to support industrial action for it to be approved in the case of "important public services".

It means a return to the days when a simple majority vote was needed to approve walkouts. But this could encourage more militancy at a time when unions are already flexing their muscles, the report warned.

It said: "Recent strike outbreaks since Covid have suggested that union militancy is reviving, and this trend could be accentuated by the changes which the government is making in the Employment Rights Bill."

The report, Liberating the Labour Market, urged the Government to scrap complex "equal value" comparisons that mean employers can be forced to pay compensation if two different jobs have different salaries. Existing rules helped cause the financial crisis in Birmingham, when the council was forced to pay more than £250 million because cleaners, who were mainly women, had been paid less than refuse workers, who were mainly men.

A government impact assessment found that the legislation will cost employers between £900million and £5billion. This includes the direct costs of delivering benefits to workers and administration.

Mr Griffith said: "This report is welcome. Labour's love-in with the unions is dragging Britain back to the worst economic mistakes of the 1970s."

He said the package of new laws "risks pricing people out of jobs, deterring investment, and sending small businesses to the wall. It's a blueprint for stagnation and leads to more strikes, more red tape, and less growth.

"This report rightly exposes the political motivation behind the bill. It is not about protecting workers, but about rewarding union paymasters. The real cost will be paid by ordinary Britons in lost jobs, lower wages and fewer opportunities. Once again, it is working people paying the price of Labour."

A government spokesperson said: "Too many workers are trapped in insecure, low-paid work, with weak protections that are poorly enforced.

"Through our transformative Plan for Change, this Government will deliver the biggest upgrade to workers' rights in a generation, contributing to economic growth, and our measures have strong support from businesses and the public."