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The head of UK retailer Next has warned that the Labour government’s flagship employment rights bill risks imposing “a huge burden on employers”.
Chief executive Lord Simon Wolfson, who is a Conservative peer, said that he supported changes meant to strengthen workers’ rights, but stressed the specific details of implementation were crucial, especially around zero-hour contracts, which the government has pledged to crack down on.
“The government, understandably, is trying to eliminate the one-sided nature of zero-hour contracts,” he said. “Where the whole retail industry [concern] will come from is . . . zero-hour contracts are either zero-hours or low hours — low hours haven’t been defined.”
The government is planning to require employers to offer workers a contract reflecting their regular working pattern, as part of its employment bill.
“As long as the threshold is set at the right level, then I think the legislation is a positive thing,” Wolfson added. “If it’s set up to a higher level, it could end up depriving a lot of people [of] the opportunity to earn extra,” he added, and cause “havoc” for businesses. Next does not have zero-hour contracts.
Employers are concerned that the sweeping workers’ rights package — including lowering the bar to strike action and a crackdown on practices such as “fire and rehire” — will drive up costs on top of the increases in taxes and minimum wage rates they already face from April.
Next has previously said it faces £67mn in added costs as a result of Budget measures, including higher employers’ national insurance contributions, which come into force next month.
Wolfson’s comments came after the fashion chain said on Thursday it had exceeded £1bn in annual profits for the first time, and announced it would open 10 new stores, its first since before the Covid-19 pandemic, sending shares up 10 per cent.
“It gives you a sense of the measure of confidence we’ve got that the worst of the structural shift [from physical retail to online] is over,” Wolfson said about the openings.
The group, which also sells other brands on its website, reported a 10 per cent jump in pre-tax profits in the year to January, and raised its outlook for the current year. It expects profits of almost £1.1bn this year, £20mn higher than its guidance in January, thanks to an uptick in sales in recent weeks.
The group said it was “positive” about its prospects, acknowledging it was “unusual for Next to begin the year on an optimistic note”, and was aiming for higher global sales.
But it also warned that “the risks to the wider UK economy are growing”. “We expect the UK tax rises in April to weaken the UK employment market and negatively impact consumer confidence as the year progresses,” it said.
Wolfson added: “The one thing I’m concerned about is the strength of the employment market, which has really carried the UK economy through the past five years.
“If I look at all of our internal measures, the applicant-to-vacancy rate across the group is increasing.” He ruled out redundancies.
Next’s full-price sales rose 5.8 per cent last year, while total group sales increased 8.2 per cent to £6.3bn. The retailer expects full-price sales for this year to rise 5 per cent.
Next reiterated its aim to increase overseas sales after many years of mainly focusing on its domestic market.
The company said new tariffs in the US and changes to thresholds for customs payments on deliveries to the US and EU would have “relatively little impact on the overall group’s sales or profits”.
