Labour’s corporate honeymoon is over, says ALEX BRUMMER

Is Labour’s relationship with business over? Based on the business community’s reaction to the New Deal for workers revealed in the King’s speech, it seems so.

As one small business owner confided to me after poring over the fine print of the Employment Rights Act, we’re not even over the honeymoon. Now, “it’s divorce.”

What is even more surprising is that the attacks come from both large companies and small and medium-sized business owners.

You can understand why: companies estimate that the biggest shake-up of workers’ rights in decades will cost them millions of pounds and push up prices.

It will abolish zero-hours contracts, ban hire-and-fire, introduce maternity and parental leave rights, sick pay and protection from unfair dismissal for all workers from day one of employment, as well as changes to sick pay.

Most radical of all, employers must make “flexible” working the default option from day one of employment.

In other words, that is working from home, a practice that is affecting sectors of the private (and public) sector and, without a doubt, hinders productivity.

Rather than protecting workers, employers say the reforms will tie companies to stifling European-style rules, destroy jobs, increase the cost of employment and stifle investment.

One of the reasons the UK has had low unemployment over the past two decades is the flexibility of the labour market.

The CBI, which represents some of the UK’s biggest companies that can generally absorb higher labour costs, is cautious, warning that tougher rules will push up prices and reduce investment at a time when businesses are under pressure.

The mood is particularly gloomy at the Federation of Small Businesses, which noted that “small businesses” were not mentioned once in the 105-page briefing document accompanying the new bills.

More worryingly, nine in ten of its members are concerned about the impact of higher costs, which will inevitably lead to hiring fewer workers.

Employers are beginning to rethink recruitment processes and the use of probationary periods due to these changes.

In the hospitality and healthcare sectors, confusion between employee and worker status is causing headaches.

There is also fear that employment claims will lead to more litigation.

Good practices are obviously essential for all employers if they want a successful and productive workplace and a satisfied staff. Achieving this does not mean enveloping employers in ever more restrictive regulations.

The Labour Party says its reforms are as much about growth as they are about social justice.

By extending rights from day one, he argues, staff will be able to move more easily to new jobs, which will boost wages.

And by banning practices like hiring and firing, he hopes companies will be encouraged to invest more in technology and training rather than cheap labor.

That is what French companies have done to overcome their own inflexible labour market, and productivity levels have risen.

Both are good reasons for reform, but if Labour is to succeed and achieve its Holy Grail of growth, ministers must also be flexible.

There is room for compromise: small businesses, for example, employing fewer than 50 people, could be exempted.

Is DEI on the way out?

The latest to shake off the yoke of diversity, equity and inclusion (DEI) policies is John Deere, the American tractor giant.

Following a boycott by farmers, Deere is dropping pronouns, “socially motivated messaging and diversity quotas,” and will no longer sponsor events like the recent Pride parade, which included children as young as three.

Deere’s about-face comes after Microsoft fired some members of its diversity team amid claims that DEI is “no longer core to the business.”

Meanwhile, Elon Musk is moving Space X and X (formerly known as Twitter) from California to Texas in protest of the Golden State’s horrendous new law that prevents schools from requiring teachers to tell parents if their child changes gender.

As Musk recently said: it’s time for DEI to DIE.