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Posted: Thu 19th Dec 2024
Justin Madders MP, minister for employment rights, writes a message to Enterprise Nation members and small business owners.
From day one of coming into government, we've been determined to restore the principle that work should always pay.
We're committed to creating jobs that provide security, treat workers fairly and provide a decent wage. No-one working full time should be struggling to pay bills and afford the essentials.
Small businesses are the lifeblood of their communities. Our Plan to Make Work Pay relies on businesses like yours to thrive and you being able to support your workers.
Our plans have been developed through serious engagement with business. Throughout this process, I've been delighted to hear from many small businesses who do so much to transform the lives of the people they employ.
Enterprise Nation and its members have shared invaluable insights with the government so far to help shape our plans.
We intend to continue working with small businesses to ensure our Plan to Make Work Pay creates a more equitable and supportive environment for both employers and workers.
The Employment Rights Bill, which has been introduced in Parliament, will allow this government to modernise its employment rights framework and respond to the changing world of work.
We'll help more people get in to work and get on in work:
making flexible working the default
establishing a new right to bereavement leave
making paternity and unpaid parental leave available from day one of starting a new job, and
strengthening the protections for pregnant women and new mothers returning to work
Much has been written about these changes and I know that across the small business community lots of conversations have been happening.
Rest assured that businesses won't be expected to make these changes overnight. We intend to consult thoroughly on the detail of implementation and will ensure that sufficient time is provided to adapt to changes.
I know many of you will be interested in our plans around statutory sick pay. Our commitment to remove the Lower Earnings Limit for all employees will help as many people as possible to access statutory sick pay, regardless of the size of their employer.
But this comes with an equally steadfast commitment to properly consult and involve businesses in delivering this change.
That's why, to make sure we properly consider the change this would mean to businesses, one of the first consultations we opened sought views on what the percentage replacement rate for those earning below the current flat rate of statutory sick pay should be.
We also recognise the importance of ensuring that a job is a good fit for both the worker and the employer.
Through this Bill, employers can operate a probationary period to assess new hires, and fair dismissal will not be prevented.
Importantly, our changes will help to ensure that newly hired employees aren't fired arbitrarily and will help drive up standards in workplaces. Again, we'll consult on the length of the initial statutory probation period, to get the balance right.
This approach will also ensure reforms to unfair dismissal will take effect no sooner than autumn 2026, leaving vital time for small businesses to prepare for any changes, and for the government to help you to prepare.
Beyond these important steps to work with you on changes to employment rights, we're going even further to support small businesses to thrive and grow.
As part of Small Business Saturday, we announced plans to address the issue of late payments through the Fair Payment Code, and a new Business Growth Service that will make it easier and quicker for SMEs to find government advice and support.
We've also backed the CIPD and the Behavioural Insights Team to launch a HR consultancy support programme, to help small businesses improve how they manage people, and comply with any changes to the law.
Our plan also sits alongside measures outlined by the chancellor in the Autumn Budget aimed to protect smaller businesses.
We're increasing the Employment Allowance to £10,500, making permanent the relief on business rates for retail, hospitality and leisure properties from 2026–27 and freezing the small business multiplier for one year to protect over a million small properties from inflationary bill increases.
Taken together, the Budget will ensure small businesses can employ up to four full-time workers on the National Living Wage before they need to pay any National Insurance contributions.
It is fundamental that our Make Work Pay reforms apply across all employers. A total of 13.5 million employees, or almost 40% of UK employment, work in small and micro businesses.
Some measures in the Bill offer exemptions for small employers where appropriate. But for our plan to work, we cannot have a "two-tier" labour market with some workers having fewer protections, leading to an uneven playing field between employers of different sizes.
I know from speaking with small business leaders that most businesses are proud to treat their staff well, and know it makes good business sense.
Our reforms will raise the floor and end the race to the bottom that saw some compete based on low pay, low standards and insecurity.
As the Bill progresses through Parliament, I look forward to continuing to work with Enterprise Nation and its members in partnership to ensure that we build a pro-business, pro-worker and pro-growth economy.
Justin Madders MP
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