Angela Rayner’s sweeping overhaul of workers’ rights could cost employers as much as £5bn a year, the Government’s own analysis has found.
According to an impact assessment published by the Department for Business and Trade, the Deputy Prime Minister’s shake-up will result in businesses raising prices, cutting back on salaries or reducing investment as they shoulder a £4.5bn bill.
Ms Rayner pledged to end “exploitative” zero-hours contracts, establish day-one rights and extend statutory sick pay when she tabled the Employment Rights Bill earlier this month.
She described the changes as “the biggest upgrade to rights at work for a generation”.
But the Government’s impact assessment warned there will be “a direct cost on employers”.
The report said: “We are confident that the total direct cost to business will be less than £5bn annually.”
This will include a £1bn annual bill for ending zero-hours contracts, £1bn in payments for shifts cancelled at short notice and up to £1bn for improved access to statutory sick pay.
These costs will arise from administrative and compliance fees and the reduction in flexibility for employers, the report explained.
The analysis said the £4.5bn bill was equivalent to a 0.4pc increase in wages across the UK.
The effects of Ms Rayner’s bill will be more heavily concentrated amongst lower-paid sectors, the report noted, rather than spread evenly across the economy.
The reforms come despite Sir Keir Starmer saying earlier this year that “those with broadest shoulders should bear the heavier burden”.
However, the report claimed that some of the new costs will be offset with benefits for businesses, including a reduction in hours lost to strikes and more productive workers.