Retail jobs at risk from Labour’s employment reforms
Retailers could cut hours and make redundancies as a result of Labour’s Employment Rights Act, a survey of business leaders has found.
Employment costs have shot up the list of concerns cited by retail chief finance officers (CFOs) and finance directors since the start of the act’s implementation, according to a survey by trade body British Retail Consortium (BRC).
More than half of CFOs polled by the BRC (52 per cent) plan to reduce working hours or overtime, and 48 per cent said they will reduce office headcount, while 32 per cent plan to cut jobs in stores.
Helen Dickinson, the BRC’s chief executive, said the government’s Employment Rights Act could “make or break job opportunities” and warned Labour to implement it carefully.
CFOs are increasingly downbeat about the retail industry, with 69 per cent saying their outlook is either “pessimistic” or “very pessimistic,” up from 56 per cent in July, when none said they were “very pessimistic” about the sector.
As in July, none of the retail chiefs surveyed by the BRC said they felt “very optimistic” about trading conditions in the sector.
Labour and employment appeared in 84 per cent of CFO’s top three concerns, up dramatically from just 21 per cent in July.
This is followed by falling demand (77 per cent), rising input costs (39 per cent) and the growing tax and regulatory burden (29 per cent).
Retail firms fear that some reforms in the Act, such as guaranteed hours, could increase costs and lead to fewer entry-level roles being advertised.
The cost of hiring rose by ten per cent for full-time and 13 per cent for part-time retail staff during 2025, according to BRC analysis.
Employment reforms ‘make or break’
Business leaders and analysts have blamed the Act for the rising joblessness revealed on Tuesday.
Dickinson said: “Done well, the reforms can raise standards while supporting flexible and entry-level roles that are vital for people whose lives don’t fit a fixed 9-5 pattern.”
“If the Government fails to consider business needs on policies including guaranteed hours and union rights, they will add complexity and reduce flexibility, ultimately stripping away entry-level and part-time opportunities at precisely the moment the country needs them most.”
Tom Moyes, an employment partner at Blacks Solicitors, told CityAM the employment reforms don’t guarantee lower hiring but could hit firms that rely on casual labour.
He said: “The Employment Rights Bill doesn’t stop businesses hiring, but it does reduce the margin for error — which is challenging for hospitality and retail where demand and staffing needs change week to week.
“Businesses that adapt their processes should manage the impact, but those reliant on informal or flexible arrangements will likely see higher costs through turnover, disputes and scheduling inefficiencies.”
A Government spokesperson said: “We know retailers are facing a difficult time, but our Employment Rights Act reforms will boost productivity and retention in workplaces across the UK and give job security to over 18 million workers.
“We are also supporting retailers through our Small Business Plan, and we will work with business including the BRC to see what further support we can provide ahead of publishing our High Streets Strategy later this year.”