Jacob Rees-Mogg to tear up workers’ rights in smaller firms to make economy ‘dynamic’

Workers will be stripped of rights in firms with fewer than 500 staff, under Liz Truss’s plans to exploit Brexit to create a more “dynamic” economy.

A shock move to lift the threshold for businesses exempt from regulations from 50 to 500 workers – and possibly 1,000 employees – has raised the alarm over a bonfire of protections.

Crucially, a review – to be led by business secretary Jacob Rees-Mogg – will include all EU “retained law” which the prime minister has already vowed to replace by the end of 2023.

The protections from decades of EU membership include limits on working time, holiday pay and parental leave, protections for agency workers and from discrimination for equal pay for work of equal value.

It is understood that, where an EU regulation exempts small businesses, this would now be handed to companies employing fewer than 500 staff – instead of just 50.

Revealing the move at the Conservative party conference, the Treasury chief secretary Chris Philp called it a “critically important” part of supply-side reforms to kickstart the economy.

“We are going to be reducing business regulation – Jacob Rees-Mogg has a whole load of ideas to do that,” he said.

“One of which is making sure that no business under 500 employees gets subject to business regulation – another critically important move.”

Earlier, Ms Truss, in a newspaper article, claimed the plan would combat Britain’s “lack of dynamism” and “release an additional 40,000 firms from red tape”.

But Jonathan Reynolds, Labour’s shadow business secretary, said: “Are the Conservatives really saying they don’t believe in basic product standards? Or food safety? Or employment law?

“Businesses themselves know this is not the way to growth and a prosperous economy. British business rightly takes pride in our high standards.”

Christine Jardine, the Lib Dem Cabinet Office spokesperson, said: “This government seems hellbent on ripping up workers’ rights and environmental protections.

“We should be supporting hard-working people get through this cost of living crisis, not threatening to take away their rights and protections.”

Steve Peers, professor of EU Law at the University of Essex, warned the move could also backfire by triggering sanctions from Brussels for a breach of the Brexit trade agreement.

“This would arguably be grounds for trade retaliation by the EU under the Brexit deal, due to breach of the standstill on lowering labour and environmental standards,” he warned.

The government is scrambling to devise reforms – on planning, immigration, finance, childcare, infrastructure development and elsewhere – to convince the markets it has a proper Growth Plan.

Ms Truss wrote: “Change is always something that people might find worrying. But what I’m fundamentally saying is we do have to change, the status quo isn’t an option.”

The granting of exemptions to firms with under 500 workers – from Monday – reads: “The changed threshold will apply to all new regulations under development as well as those under current and future review, including retained EU laws”.