Gail’s Bakery Chairman Warns Labour’s Workers’ Rights Reforms Could Lead to Business Failures

Luke Johnson, the chairman of Gail’s bakery chain and a prominent entrepreneur, has expressed deep concerns about Labour’s proposed Employment Rights Bill, warning that some of his businesses could struggle to survive under the new regulations.

Speaking to the Employment Rights Bill committee, Johnson, who also has investments in Brompton bicycles and Revolution Bars, said the bill’s potential costs and complexities could overwhelm small and medium-sized enterprises (SMEs). “In some cases, some of my companies might not survive next year,” he told ministers.

Johnson highlighted the difficult economic climate, with insolvency specialists predicting an increase in company failures, and questioned the timing of the proposed reforms, especially following the recent tax hikes introduced in the October Budget. He argued that for many smaller businesses that lack extensive human resources departments, the bill’s regulatory demands could prove unmanageable.

“The idea that companies that can barely afford any form of HR could stomach a big new bill of 150 pages in 28 measures—they won’t even have time to read it,” Johnson said. “You never know, until you get a big tribunal, what the real cost is.”

The Employment Rights Bill aims to strengthen workers’ protections, including improved job security, enhanced flexible working options, and greater union powers. It would also allow employees to take employers to tribunal from day one of their employment. While these changes are designed to benefit workers, many business leaders are concerned about the potential impact on operational costs and hiring practices.

The government’s own impact assessment estimates that the reforms could cost businesses up to £4.5 billion. Alex Hall-Chen, head of policy at the Institute of Directors, warned that the bill could discourage companies from hiring new staff, particularly those who are considered “borderline candidates,” due to the heightened risks and costs associated with employment disputes.

Andrew Griffith, the Shadow Business Secretary, has called for the bill to be delayed until comprehensive impact assessments are carried out. He criticized the government’s existing assessments, saying they were “not fit for purpose.”

Johnson’s remarks highlight the ongoing tension between increasing worker protections and supporting businesses, especially in a challenging economic environment. “Jobs don’t just fall from the sky—they appear because companies are created by risk-takers,” he stated. “If you crush the private sector, you crush jobs. Without jobs, you don’t have civilisation.”

As ministers continue consultations on the bill, they face the difficult task of balancing the protection of workers’ rights with the sustainability of SMEs, which play a crucial role in the UK economy.