Leading business groups have warned that plans to introduce guaranteed hours could lead to fewer jobs and reduced opportunities for workers, particularly young people entering the labour market.
In a joint letter to government seen by HRreview, four major industry bodies said the proposals, part of the Employment Rights Act, risk damaging employment prospects if implemented without changes.
The letter, sent to the Secretary of State for Business and Trade and seen by the Recruitment and Employment Confederation, was signed by the British Retail Consortium, Food and Drink Federation, the Recruitment and Employment Confederation and UKHospitality.
The groups said there is “deep and growing” concern that the current approach could undermine flexibility across the labour market at a time when demand is already weak.
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Warning over impact on jobs and entry-level roles
The organisations said the policy could lead employers to reduce hiring, cut hours or withdraw flexible roles altogether if costs and risks increase.
They warned that entry-level roles could be particularly affected, making it harder for young people to access work at a time when youth unemployment remains elevated.
In the letter, the groups said poorly designed rules could act as a tipping point for employers. “With demand already weakened, poorly designed guaranteed hours measures could become a tipping point, pushing employers to reduce hiring, limit hours or withdraw flexible roles altogether.”
They added that the policy risks favouring less secure arrangements if businesses move away from structured flexible roles.
Concerns over flexibility and business costs
The groups said guaranteed hours requirements could increase employment costs, legal risk and administrative burden if applied too rigidly.
They argued that flexibility remains essential in sectors such as retail, hospitality and food production, where demand can fluctuate daily and seasonally.
Many workers, including students and those with caring responsibilities, rely on flexible hours to remain in employment, the letter said.
The organisations also pointed to slowing labour market demand, citing recent data showing a decline in job postings in hospitality.
Call for changes to policy design
The groups urged the government to revise key elements of the policy to avoid unintended consequences.
They called for a longer reference period to assess regular working hours, arguing that a minimum of six months, and ideally 12 months, would better reflect genuine working patterns.
They also said agency workers should be treated differently, with any additional hours determined by recruitment agencies rather than end employers to avoid unintended impacts on hiring.
In addition, they recommended setting a low-hours threshold at eight hours to ensure the policy remains targeted at those most in need of protection.
The letter said the current approach risks a damaging outcome if left unchanged. “To avoid the double whammy of increasing unemployment and fewer young people entering the labour market we would like to see the government send an urgent and clear message to businesses that they should continue to hire with confidence.”
Pressure builds ahead of implementation
The intervention comes as businesses and policymakers continue to debate how to balance job security with labour market flexibility under the new legislation.
The Employment Rights Act includes a range of reforms aimed at improving conditions for workers, but employers have raised concerns about the practical impact of some measures.
The four trade bodies said they support the aim of protecting workers but warned that poorly designed rules could have the opposite effect, reducing opportunities and weakening job creation.
They added that there is still time to adjust the policy and called for closer engagement between government and industry before final decisions are made.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
