Matthew Elliott: Laudable though it is to give employees rights, what if doing so means people can’t get employed

Lord Elliott is President of the Jobs Foundation

The Employment Rights Bill is currently going through its committee stage in the House of Lords.

At first sight, the Bill might seem reasonable, perhaps even admirable. After all, who doesn’t want employees to be safer in their jobs and improve the rights they have in work? Surely, those disagreeing with this objective would only be those who want to mistreat their employees?

However, amidst this discussion about what the Bill means for both current employees and employers, there is a whole group left out of the discussion: those not currently in work.

There are several potential unintended consequences from the Bill, especially in the areas of changing probation periods and allowing unfair dismissal claims from the first day of employment. These two aspects will have a significant impact on the ability of businesses to hire people from the margins of society – those people we should be doing most to help into work.

We know that a job doesn’t just give people a wage that they can live on.

It gives people an opportunity to learn new skills, a routine to live by, and a sense of place and purpose in life. This is why Government’s mission to ‘Get Britain Working’ by bringing an additional two million people into employment is admirable. The fact that there are nearly ten million adults in the UK currently economically inactive is a huge strain on public finances, but more than this, it is a shocking amount of wasted human potential. This is especially true for the one in eight young people not in education, employment or training.

These commendable goals in this space make it even more puzzling why the Government has not considered the unintended consequences of their proposals on employment rights. Even Sir Charlie Mayfield, who is leading the Government’s review into ‘Keeping Britain Working’, pointed out on a visit to Denmark – a location chosen to learn from the country’s success compared to the UK at employing long-term sick – it is “relatively easy to hire and to fire people, I would say easier than in the UK”.

It is tempting to think that additional protections on day one rights and probation periods are needed for the vulnerable who might find themselves on the receiving end of one of the few less caring employers. In reality, they will make it more and more difficult for these potential employees to find an employer, who are often afraid of taking on people they see as ‘riskier hires’.

As President of the Jobs Foundation, I have spent the last year travelling up and down the country, speaking with the businesses and charities that are leading the way on supporting people into work. Companies like Dusty Knuckle, a tasty bakery that employs ex-offenders, or Marks & Starts, an employability scheme for young people run by Marks & Spencer and The King’s Trust, do impressive work in giving people the training and support needed to transition into the workplace and thrive.

In particular, the ASCEND programme in Sheffield connects unemployed young adults to employers, giving them training and mentorship to successfully get into work. Those who come through the programme have an astounding 75 per cent change of staying in work, demonstrating that with the right help, people can be given the hand up to stable employment.

But the changes to probationary periods proposed in the Bill will undermine the commendable vocation of those doing such good work. As implied by Sir Charlie, giving people a hand up in life requires flexibility. Sometimes things do not work out at the first attempt. Perhaps someone does not show up to work, they do not click with the first working environment, or they decide that they are not suited to that role. Employers need this flexibility to deal with the realities of employing those who do not start with the requisite skills, so that they can try to train them up and see if it works well for all involved.

It is perhaps understandable why the Government has not fully thought through these unintended consequences when you realise that there has not yet been a proper Impact Assessment for the Bill. Even the provisional Impact Assessment from the Government concluded that the additional cost to businesses of provisions in the Bill would equate to £5 billion per year (likely an underestimate), which is equivalent to employing over 200,000 people at the National Living Wage.

In addition, many of the new provisions included in the Bill will be operationalised through secondary legislation (so-called Henry VIII clauses), with the details to be determined. This is a haphazard way of making legislation, especially when it comes to a matter as important as jobs. Businesses need clarity, and deciding important measures such as the length of a probation period through secondary legislation avoids democratic accountability and scrutiny and will result in poorer laws as a result.

Employment is already trending in the wrong direction. Figures released by the ONS last week show that payrolled employment in the UK has fallen by over 50,000 between the start of the year and April, which is before the damaging hike to Employer NICs, and the impact that this will have on employment, could begin to bite.

At a time when the UK is suffering from chronic economic inactivity, the Government should be supporting businesses to get people back into work. With the Employment Rights Bill, the Government is instead making it more difficult for businesses to give people a leg up onto that ladder of opportunity.

I hope that the Government accepts some of the very sensible amendments to this Bill, to ensure that businesses can continue to do their bit to Get Britain Working.