Employment Rights: Impact on Businesses

Sarah Olney Excerpts

Tuesday 16th September 2025 Westminster Hall

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Dr Murrison. I thank the hon. Member for Spelthorne (Lincoln Jopp) for securing this debate. The Liberal Democrats support measures that work to strengthen employment rights, so yesterday we welcomed aspects of the Employment Rights Bill, such as boosting statutory sick pay, strengthening support for whistleblowers and increasing support for carers. All those measures move us in the right direction, but as the legislation progresses through Parliament, we remain concerned about the specific way in which many of them will be implemented. We must ensure that the legislation strikes the right balance for both employees and business.

In the debate yesterday, my colleagues and I highlighted several concerns about the absence of detail in the Bill. So many key elements will be left to secondary legislation or subject to consultation. Businesses in my constituency tell me that they are being left in limbo by the Government’s framing of the Bill, which prevents long-term planning. I am disappointed that the Government did not support the Liberal Democrat amendments that would have created more certainty for business in matters such as the definition of short notice when a shift is cancelled, or the changes to the period for making a claim for unfair dismissal.

Any new measures to support workers must go hand in hand with much-needed reforms to support our small businesses, such reforming the broken business rates system, bringing down trade barriers and properly reforming the apprenticeship levy. Although the impact of the Employment Rights Bill will be a significant shift for businesses, there are many other factors that remain challenging.

Small businesses are at the centre of our communities and our local economies, creating the jobs on which we all rely. We are glad that raising the employment allowance will help to protect the very smallest employers, but thousands of local businesses, including many in the hospitality sector, will still feel the damaging impact of the national insurance increase. My Liberal Democrat colleagues and I have persistently opposed these measures at every turn. Once again, I urge the Government to scrap them.

The Government’s decision to raise the rate of national insurance contributions while also reducing the threshold at which they are levied has significantly raised the cost of employing part-time workers, delivering a disproportionately large blow to the hospitality sector. Just today, the latest labour market figures show rising numbers of people claiming unemployment benefits, alongside many businesses facing workforce shortages. The Government need to scrap this failed tax, or we will not get the growth that we need to rebuild our public services.

It is not just about staffing costs. The Government must take other steps to boost the hospitality workforce, including introducing a youth mobility scheme with much more urgency and properly investing in skills and training. More broadly, they must look at measures that would ease the pressure felt by so many businesses and boost the economy as a whole. We continue to call on them to introduce vital reform to the business rates system. We also know that many businesses are struggling with sky-high energy costs, so I urge the Minister to consider Liberal Democrat proposals that will cut energy bills by a half within 10 years, by breaking the link between gas prices and electricity costs so that households and businesses can get the benefit of cheap, clean power and lower energy bills. I urge the Minister to look at our proposals to give businesses the support that they desperately need.

Most employers want to do the right thing by their staff. I have spoken to many businesses and key stakeholder groups that support the aims of the Bill but have raised significant concerns that some of the measures could backfire, leading to the loss of thousands of flexible, part-time and entry-level roles in particular. So much of the detail of the Bill is still undecided. That will compound the challenges that small businesses are facing, from the Government’s changes to employer national insurance to the reduction in business rates relief and the absence of any meaningful action to bring down commercial energy prices. We must find a way to support and provide clarity for businesses trying to plan ahead.

The Liberal Democrats remain supportive of many of the measures that the Employment Rights Bill will introduce to improve support for workers. However, as we see the impact of the legislation, we will continue to seek the right balance for both employees and businesses.