In a rare and dramatic intervention, the UK’s five largest business lobby groups have launched a stinging attack on Labour’s flagship Employment Rights (Union) Bill, warning it risks inflicting deep harm on the nation’s economic prospects.
The British Chambers of Commerce (BCC), Confederation of British Industry (CBI), Institute of Directors (IoD), Federation of Small Businesses (FSB), and Make UK have united to condemn the Bill in a joint letter to the Department for Business and Trade (DBT), calling on peers in the House of Lords to step in and overhaul the legislation.
In an unusually co-ordinated effort, the so-called ‘Big Five’ warn the Bill will “damage growth and employment, undermining the government’s own goals.” They describe the current draft of the legislation as “a recipe for damaging, not raising living standards.”
Their letter states: “Our collective position is that… the Bill will have deeply damaging implications for the government’s priority growth mission as well as their admirable focus on tackling rising economic inactivity.”
They argue that the legislation—initially hailed by Labour as a cornerstone of its post-election workers’ rights agenda—risks choking hiring and productivity while exposing businesses to a wave of red tape and legal uncertainty.
The Bill, which includes controversial measures such as banning zero-hours contracts and outlawing ‘fire and rehire’ practices, has been widely praised by trade unions and left-wing policy groups as a “much-needed upgrade” to UK employment law.
However, the business backlash has been fierce. In their letter, the five leading industry bodies warn that new protections from day one of employment—such as protection from unfair dismissal—would leave employers increasingly vulnerable to protracted and costly tribunal claims.
They argue that “business owners [will become] more cautious about creating new jobs when taking the risk of trying to grow.”
The groups also object to what they describe as damaging provisions relating to contractual changes and union powers, including the removal of statutory thresholds for strike ballots. These, they warn, would “upend firms’ confidence that union representatives speak on behalf of staff.”
They continue: “Removal of the statutory recognition and strike ballot turnout thresholds upends firms’ confidence that union representatives speak on behalf of staff,” adding that it is a “recipe for conflict”.
In a direct appeal to Parliament’s upper chamber, they urge: “We are calling upon the Lords to fully scrutinise and improve this legislation to ensure it is genuinely both pro-business and pro-worker, and to prevent unnecessary harm to employment and growth.”
Their intervention is among the most significant and organised expressions of business concern since the Bill was introduced, with some analysts interpreting it as a turning point in the political debate over Labour’s economic strategy.
Shadow Business Secretary Andrew Griffith weighed in, throwing his support behind the industry groups’ concerns. “The business groups are correct when they say, as currently drafted, the Bill will have deeply damaging implications for the government’s priority growth mission,” he said.
He added bluntly: “The world has changed, the government must shelve this disaster of a Bill now.”
Although the business groups acknowledged that some elements of the Bill are “not contentious,” they insist the overall package—particularly the empowerment of trade unions and removal of safeguards for employers—risks stifling innovation, deterring investment, and worsening Britain’s already sluggish productivity.
A spokesman for the Department for Business and Trade responded by saying: “We’ve consulted extensively with business on our proposals, and we will engage on the implementation of legislation to ensure it works for employers and workers alike.”
The high-profile backlash marks an unusual alignment among the UK’s most influential business organisations, who seldom speak with one voice. That they have chosen to do so now underscores the depth of concern within the business community about the direction of employment law under Labour’s leadership.
