Labour’s plans to overhaul workers rights will stifle investment, depress wages and slow growth, business leaders have warned.

They described the new measures – which will be unveiled today (Thur) – as “clumsy, chaotic and poorly planned”.

Banning zero-hours contracts and fire and rehire practices will be included in the 28 changes.

Most of them are not expected to be implemented before the autumn of 2026.

But the Federation of Small Businesses said the Employment Rights Bill will hamper firms up and down the country.

The FSB’s Tina McKenzie, said: “This legislation is rushed job, clumsy, chaotic and poorly planned – dropping 28 new measures onto small business employers all at once leaves them scrambling to make sense of it all.

“Beyond warm words, it lacks any real pro-growth element and will increase economic inactivity, seriously jeopardising the Government’s own 80 per cent employment target.

“There are already 65,000 fewer payroll jobs since Labour took power, and the new Government is sending out a troubling signal to businesses and investors.”

Under the Bill, the existing two-year qualifying period for protections from unfair dismissal will be removed and workers will have the right from the first day in a job.

Ministers say this will benefit nine million workers who have been with their employer for less than two years.

There will be consultations on a new statutory period, with ministers promising employers a “lighter touch” process covering dismissals.

The Bill also spells out day one rights for paternity, parental and bereavement leave for millions of workers, while statutory sick pay will be paid from the first day of a worker being sick rather than having to wait until the fourth day.

Around 30,000 fathers or partners will be eligible for paternity leave, while an extra 1.5 million parents will have the right to unpaid leave from day one.

The Tories branded the package of laws as an “economic own goal”.

Kevin Hollinrake, Shadow Secretary of State for Business and Trade, said: “Despite a chorus of opposition and the fastest decline in confidence from business owners large and small on record, Labour are rushing this legislation through Parliament to appease their trade union paymasters, ignoring the inevitable negative economic impacts on jobs and wages.

“This is a thinly veiled reward for the trade unions after they donated £28 million to Keir Starmer’s Labour Party.

“We will look closely at the detail of what the Labour Party have set out. But businesses and the economy needs certainty not the threat of being sent back to the 1970s, unleashing waves of low threshold, zero warning strikes, driving down growth and slowing productivity.”

And Conservative MP Greg Smith said: “Labour’s looming package of union laws will be the biggest economic own goal since Gordon Brown said he had ended the cycle of boom and bust.

“Their ‘New Deal for Working People’ will stifle investment, depress wages and slow growth. It is the wrong thing for our country.”

But Deputy Prime Minister Angela Rayner said: “This Labour Government’s plan to make work pay is central to achieving our growth mission, boosting productivity.”

Unions warmly welcomed the measures as a “seismic shift” from the low pay, low productivity economy they accused the previous Conservative government of presiding over.