Labour’s package of workers’ rights will cost business up to £5 billion a year, with small firms shouldering a disproportionate burden of the additional measures, according to a government report.

The changes included in the employment rights’ bill, which was presented in parliament for its second reading, include a ban on “exploitative” zero-hours contracts, day-one rights against unfair dismissal and new rights for unions to access workplaces. 

Ahead of a possible rise in employers’ national insurance contributions in the budget, the British Chambers of Commerce has warned that companies risk being “buried under a mountain of additional cost”.

Most would represent “a transfer from businesses to their workers”, according to a a government assessment document published yesterday.

Small businesses will be “disproportionately” hit, according to the assessment, with companies likely to respond by putting up prices and cutting staff.

Strikes may become more common under reforms which repeal anti-trade union laws and extend the mandate for industrial action ballots from six to 12 months.

However, the analysis by the Department for Business and Trade concludes that the package of reforms is “pro-growth” because the hit to business would be offset by higher productivity, more workers entering the labour market and better rewarded staff.

“We also expect there to be significant wider benefits to society, including positive impacts on health and wellbeing, equality, competition and participation,” it said.

Angela Rayner, the deputy prime minister, insists the reforms offer a “momentous opportunity to chart a new path for the UK economy” and said more than ten million workers “will benefit from Labour’s plan”.

The changes also include a right to guaranteed hours, flexible working by default, sick pay from the first day of illness and new rights to parental and bereavement leave.

A survey of business found that 40% would respond to higher costs by putting up prices, with 17% cutting staff numbers and 31% saying they would absorb the costs. Giving staff sick pay from their first day of illness would cost business about £400 million, the assessment found.

Small business would be hardest hit by the overall changes, with five of the nine biggest measures affecting them “disproportionately”, the assessment said.

However, it found that much the added cost would be due to “employers familiarising themselves with new legislation, administrative and compliance costs”. Business costs will be “greatest in the short term and reduce over time”, it added.

The changes will be more disruptive for companies that rely on flexible contracts in low-paying sectors. They will be proportionately higher for medium and smaller businesses because of the “fixed costs of admin and compliance burdens”. 

The corresponding benefits to workers will be largest for those working in low-paid sectors on insecure terms.

Ministers have rejected suggestions of looser rules for small business, saying this would create a “two-tier” workforce. The bill covers everywhere but Northern Ireland, where employment law is devolved.

Tina McKenzie, of the Federation of Small Businesses, said the assessment “reveals the risks these measures pose to the economy, jobs, and wages”, urging the government to offer help to mitigate “clear risks to small firms”.

Paul Nowak, the general secretary of the TUC, defended the bill by saying the impact assessment “shows that the business costs are negligible and are more than offset by the wider economic and social gains”.

He added: “These changes will mostly affect those companies whose business models have been built on low-paid, insecure employment. Decent employers will welcome these measures”.