Business leaders warned that new workers’ rights laws unveiled by the government posed “big risks” for small firms.

Ministers published legislation that will give employees the right to sick pay on their first day off, stronger flexible working arrangements and maternity pay entitlement as soon as they join a new company.

The bill will also overturn Conservative reforms that required some public sector workers to provide a minimum level of service if they go on strike after a wave of walkouts led by trade unions.

But many of the detailed changes will only be introduced in years to come without the full scrutiny process that comes with a proposed new Act of Parliament.

The Federation of Small Businesses described the legislation as a “rushed job, clumsy, chaotic and poorly planned.”

Neil Carberry, chief executive of the Recruitment and Employment Federation, said the government should be given credit for engaging with businesses but warned changes that damage employment opportunities or dissuade investors must be avoided.

He added: “As businesses, we go into that with goodwill but with lots of concern. Running a business in the UK right now feels hard. Confidence needs a boost.

“Unions like to talk about profits, but that is not the life of the majority of businesses that are small or medium-sized. So: big day, lots to sort out, big risks – but not unnavigable. And with a timescale that give us space to get those brass tacks sorted.”

Economist Julian Jessop said that while the proposals have been watered down the government fails to recognise all the trade offs.

He added: “In particular, increased rights for workers also create increased obligations for employers.

“This will deter some firms from taking on new workers, particularly from groups that they think might now be more risky to employ.

“Making it harder to fire underperforming staff will also undermine productivity and increase the burden on others.

“And the antipathy towards so-called ‘zero hours contracts’ is just daft. Many workers value the additional flexibility – and otherwise would not have jobs at all.”

The new Employment Rights Bill will strengthen the rights of trade union representatives and led to the creation of a new Fair Work Agency.

It will require large employers to produce action plans on how to address gender pay gaps and support employees through the menopause.

Day one protection from unfair dismissal will be introduced and unscrupulous fire and rehire and fire practices outlawed.

The reforms were drawn up by deputy prime minister Angela Rayner and Business Secretary Jonathan Reynolds.

He said: “This is a comprehensive Bill which, once implemented, will represent the biggest upgrade in employment rights for a generation.”

The British Chambers of Commerce said the government will need to consult on the changes that are introduced further down the line.

Jane Gratton, deputy director of public policy, said: “If the right balance is struck then we have the potential to get more people into work and boost economic growth. But if the process is mishandled there is a danger these changes could have the opposite effect.

“It is important to stress that the legislation we are seeing today is a starting point. It is setting out a framework, and the detail and the mechanics of how this will operate will still need much further consultation.

“Many of these changes are going to need secondary legislation and it’s unlikely we’ll see major changes to business practices until 2026.”

TUC General Secretary Paul Nowak said: “Everyone deserves a decent, secure job they can build a life on.

“This positive and ambitious plan to make work pay will raise incomes and boost living standards across Britain.

“Today’s Bill is a crucial first step towards delivering better-quality employment in every part of the UK.”