Jack Rankin is the Member of Parliament for Windsor and an advisory board member of the Independent Business Network.
This government has supposedly staked its reputation on growth, on backing business, and on being on the side of working people. It has then proceeded to deliver the most hostile employment legislation in a generation, with small and medium-sized enterprises (“SMEs”) expected to absorb the consequences and carry on.
The Employment Rights Act comes into force this week, and the consultation record makes for uncomfortable reading. Of the 1,612 respondents to the government’s own consultation on trade union access to workplaces, 1,210 were employers. Some 95.3 per cent opposed the weekly union access model. The government proceeded regardless. 88.4 per cent opposed the 25-day Central Arbitration Committee referral limit. Again, the government proceeded. On virtually every contested measure, employer objections were noted and set aside (Guido Fawkes). The exercise had the form of consultation without the substance of it.
The timing could scarcely be worse. Nearly three quarters of firms (71 per cent) reported hiring difficulties in the first quarter of 2026, with labour costs cited as the single biggest pressure by 73 per cent of businesses. The Employment Rights Act is not the sole cause of those pressures, but it is a significant additional burden landing on firms that are already stretched.
Sir Keir Starmer has repeatedly placed growth at the centre of his government’s economic purpose. His own administration defines an SME as any business with fewer than 250 employees. These are the firms that employ the majority of the private sector workforce, anchor local economies and drive innovation across the country. The decision to bring any employer with more than 21 staff into the full scope of the trade union access provisions sits uneasily alongside that commitment. A business with 30 employees does not have the legal resource or administrative infrastructure of a large corporation and treating it as though it does is a policy choice with real consequences.
The consultation response on the exemption itself warrants scrutiny. Of the 1,612 respondents to the wider consultation, only 483 answered the specific question on whether employers with fewer than 21 workers should be exempt. Of those, 43.3 per cent agreed with the exemption and 56.7 per cent disagreed. The government has presented this as a mandate, but it is a slim majority of a partial response, drawn from a consultation in which employers made up the overwhelming majority of participants. The write-up of those responses is similarly evasive, offering a broad summary of concerns on both sides without meaningfully engaging with the weight of employer objection. That is not a serious evidential basis on which to remove protections for businesses employing between 21 and 249 people.
More concerning still, the government has signalled that even the 21-employee exemption may not hold. Its own response indicated plans to review the threshold and assess whether further adjustments are required. The direction of travel is clear.
Alongside the union access provisions, the newly established Fair Work Agency (dubbed the “jobs police” in some quarters) brings a further shift in the enforcement landscape.
The Agency has the power to conduct unannounced workplace inspections, enter premises under warrant, use reasonable force, search individuals and seize materials. A small business owner with a team of 30 now faces the same enforcement apparatus as a large employer. That is not a proportionate settlement.
The government’s own SME definition (fewer than 250 employees) already exists in law. Applying it consistently, and exempting businesses below that threshold from the union access regime, would be a straightforward corrective. Without it, the rhetoric of backing British business and the reality of this legislation will remain in direct contradiction, and it is the growth agenda (and the wider economy) that will pay the price.
Jack Rankin is the Member of Parliament for Windsor and an advisory board member of the Independent Business Network.
This government has supposedly staked its reputation on growth, on backing business, and on being on the side of working people. It has then proceeded to deliver the most hostile employment legislation in a generation, with small and medium-sized enterprises (“SMEs”) expected to absorb the consequences and carry on.
The Employment Rights Act comes into force this week, and the consultation record makes for uncomfortable reading. Of the 1,612 respondents to the government’s own consultation on trade union access to workplaces, 1,210 were employers. Some 95.3 per cent opposed the weekly union access model. The government proceeded regardless. 88.4 per cent opposed the 25-day Central Arbitration Committee referral limit. Again, the government proceeded. On virtually every contested measure, employer objections were noted and set aside (Guido Fawkes). The exercise had the form of consultation without the substance of it.
The timing could scarcely be worse. Nearly three quarters of firms (71 per cent) reported hiring difficulties in the first quarter of 2026, with labour costs cited as the single biggest pressure by 73 per cent of businesses. The Employment Rights Act is not the sole cause of those pressures, but it is a significant additional burden landing on firms that are already stretched.
Sir Keir Starmer has repeatedly placed growth at the centre of his government’s economic purpose. His own administration defines an SME as any business with fewer than 250 employees. These are the firms that employ the majority of the private sector workforce, anchor local economies and drive innovation across the country. The decision to bring any employer with more than 21 staff into the full scope of the trade union access provisions sits uneasily alongside that commitment. A business with 30 employees does not have the legal resource or administrative infrastructure of a large corporation and treating it as though it does is a policy choice with real consequences.
The consultation response on the exemption itself warrants scrutiny. Of the 1,612 respondents to the wider consultation, only 483 answered the specific question on whether employers with fewer than 21 workers should be exempt. Of those, 43.3 per cent agreed with the exemption and 56.7 per cent disagreed. The government has presented this as a mandate, but it is a slim majority of a partial response, drawn from a consultation in which employers made up the overwhelming majority of participants. The write-up of those responses is similarly evasive, offering a broad summary of concerns on both sides without meaningfully engaging with the weight of employer objection. That is not a serious evidential basis on which to remove protections for businesses employing between 21 and 249 people.
More concerning still, the government has signalled that even the 21-employee exemption may not hold. Its own response indicated plans to review the threshold and assess whether further adjustments are required. The direction of travel is clear.
Alongside the union access provisions, the newly established Fair Work Agency (dubbed the “jobs police” in some quarters) brings a further shift in the enforcement landscape.
The Agency has the power to conduct unannounced workplace inspections, enter premises under warrant, use reasonable force, search individuals and seize materials. A small business owner with a team of 30 now faces the same enforcement apparatus as a large employer. That is not a proportionate settlement.
The government’s own SME definition (fewer than 250 employees) already exists in law. Applying it consistently, and exempting businesses below that threshold from the union access regime, would be a straightforward corrective. Without it, the rhetoric of backing British business and the reality of this legislation will remain in direct contradiction, and it is the growth agenda (and the wider economy) that will pay the price.