Labour is putting a 'handbrake' on jobs as one in three bosses say they will cut hiring over workers' rights reforms

Labour has been accused of putting a 'handbrake' on jobs as more than one in three employers say they will cut hiring as a result of new workers' rights rules.

A poll by the Chartered Institute of Personnel and Development (CIPD) found 37 per cent plan to reduce the recruitment of permanent staff as a result of the Employment Rights Act.

Firms pointed to expectations that the Act would mean rising costs and risk conflicts in the workplace.

The overhaul - championed by Angela Rayner and Labour's union paymasters - include a clampdown on zero-hours contracts and greater protection for newly-hired staff from being fired.

But business groups have warned it only adds to the pressure from major tax increases, botched business rates reform, and a steep rise in the minimum wage.

Ben Willmott, head of public policy at the CIPD, said: 'Against a backdrop of low business confidence and already weak hiring intentions, our research suggests there is a real risk that the Employment Rights Act measures will act as a further handbrake on job creation and recruitment.'

It comes at a time when unemployment is already at the highest level since the pandemic and the Bank of England is predicting it will rise even further this year.

Mr Willmott said the government must 'try and mitigate these potential negative consequences' by consulting with business 'and where necessary compromise on key measures'.

The report also suggested that government calculations that the new rules would cause a £1 billion hit to business were an underestimate and did not take into account 'the full administrative and operational burden on employers'.

It said the estimate was based on the assumption that it would take managers an hour or less to familiarise themselves with many of the changes.

'The CIPD believes these assumptions significantly underestimate the time required to update payroll systems, internal policies and training for both HR professionals and line managers to be able to manage the legislative changes and to work effectively with unions,' the report said.

It comes after official figures last week showed the economy grew by just 0.1 per cent in each of the final two quarters of last year as uncertainty ahead of Rachel Reeves' late November Budget and the damaging impact of Labour's policies crushed businesses.

Chancellor Rachel Reeves claimed the government had 'created the conditions' for the economy to grow but many in business argue that she has done the opposite.

Former Bank of England rate-setter Andrew Sentance said after last week's figures that the 2020s was now on course to be the 'most dismal decade' for UK growth in 100 years.

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