Business chiefs have reacted with outrage to Labour's landmark employment reforms.

Bosses say the biggest shake-up of workers' rights in a generation, which ministers will unveil today, will be 'bad for jobs' and 'inject fear' into the workplace.

The new law will give nine million workers the right to launch unfair dismissal claims from their first day.

Flexible working, including working from home, will also be made the 'default for all' where possible.

Labour has claimed its reforms will offer a 'boom to the economy' as part of Sir Keir Starmer's growth agenda.

But there are fears the Bill could tie small firms up in red tape, causing bosses to 'freeze employment'. 

Martin McTague, national chairman of the Federation of Small Businesses (FSB), warned last night: 'With all the good intentions, this [Bill] will inject fear into that employment relationship. It makes most small businesses very nervous.'

Tina McKenzie, policy chair at the FSB, described the legislation as a 'rushed job, clumsy, chaotic and poorly planned'.

She added: '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.'

Referring to the right to claim unfair dismissal from day one, Ms McKenzie said this reform will 'add to the risks associated with hiring people'.

She added: 'That increased risk will inevitably deter small employers from taking on new people, for fear of facing an employment tribunal simply because a new recruit turns out to be unsuited to the role. That's bad for jobs, and a barrier to growth.'

The Employment Rights Bill, which includes 28 measures, will also ban zero-hour contracts and introduce a nine-month probation period.

Many of the proposals will be put out for consultation, with some major changes not expected to be introduced until autumn 2026.

However some proposals made during the Election campaign, including Angela Rayner's so-called Right To Switch Off, are not in the draft legislation at all.

Advertising mogul Sir Martin Sorrell previously described the Deputy Prime Minister's flagship plan to reform workers' rights as Labour's 'Achilles heel'.

Last night he said: '[The latest proposals] will endanger and discourage productive expansion and new investment in the UK and encourage investors to look elsewhere.'

However Labour MPs and trade unions hailed the reforms, with Ms Rayner saying the Government was 'calling time on the Tories' scorched earth approach to industrial relations'. 

Christina McAnea, general secretary of Unison which represents public service workers, said: 'Day-one rights, job flexibility, an end to exploitative work practices and measures to ensure unions can be a force for good are what millions of people desperately need. This Bill will transform workers' lives for the better.'

Kate Nicholls, chief executive of UKHospitality, said she was 'pleased' that Labour recognised 'the importance of flexibility.' But she warned the Government to 'take its time [to] avoid unintended consequences'.