Gail’s chairman warns that Labour’s workers’ rights plans could threaten businesses
Luke Johnson, chairman of the Gail’s bakery chain and a prominent businessman, warned that some of his businesses “may not survive” under the proposed labor force changes.
Speaking to the Employment Rights Bill committee, Johnson expressed concern about the additional costs and difficulties the legislation would impose on small and medium-sized enterprises (SMEs).
“At times, some of my companies may not survive next year,” he told ministers. Johnson, whose diversified portfolio includes investments in Brompton bikes and Revolution Bars, highlighted that shortage experts expect more corporate downfalls due to the challenging economic environment.
He stressed that the timing of the Employment Rights Bill was “unbelievable”, especially following the tax increase announced in the October Budget. Johnson argued that the combination of higher taxes and increased regulatory burdens could weigh on small businesses that don’t have multiple human resources departments.
“The idea that companies that can’t afford any kind of HR can put in a huge new bill of 150 pages with 28 steps – they won’t have time to read it,” he said. “You won’t know, until you get the high court, what the real costs are.”
The proposed labor reforms aim to improve workers’ rights by providing more job security, stronger flexible work provisions, and increased union powers. Employees will also be able to take employers to court from the first day of their employment. While these changes are intended to protect workers, some business leaders are concerned about the potential impact on labor costs and hiring processes.
The government’s own impact assessment suggests the changes could cost businesses £4.5 billion. Alex Hall-Chen, head of policy at the Institute of Directors, warned that the changes could deter companies from hiring new workers, especially those considered “borderline entrants,” because of the increased risks and costs associated with employment disputes.
Andrew Griffith, the Business Secretary, has called for the bill to be delayed until a full impact assessment is carried out. In a letter to Business Secretary Jonathan Reynolds, Griffith said the bill could impose “damaging and unacceptable burdens on business,” referring to the watchdog’s finding that government impact assessments are “not fit for purpose.”
Johnson’s comments underscored the tension between efforts to improve worker protections and the need to support businesses amid economic uncertainty. “Jobs don’t just fall from the sky—they come because companies are created by people who take risks,” he said. “When you crush private companies, you suppress jobs. Without jobs, you have no civilization.”
As ministers continue to discuss the proposed reforms, they are faced with the challenge of balancing the rights and protection of workers with the sustainability and growth of businesses, particularly SMEs which form the backbone of the UK economy.
