Jonathan Reynolds, the Business secretary, today said that allowing staff to work from home brought benefits to firms – though he added that there will be guidance issued setting out when bosses can insist staff come into the office.

But his Tory shadow Kevin Hollinrake cited opposition to the plans from groups including the Federation of Small Businesses and CBI.

‘You’ve got Labour coming on now saying, ”ah, we know you got it all wrong. All you business people, you got it all wrong. We can do it much better. The unions have told us what to do. And we’re going to simply oppose it on you”.’

Asked who will decide when flexible working is not possible, Mr Reynolds told the BBC: ‘There will be some clear statutory guidance with grounds upon which that wouldn’t be possible.

‘So that might mean you have to train junior members of staff, it might be that you have management responsibilities.

But it will be straightforward and of course we should always recognise where this can be agreed between an employer and employee.

‘There are real business benefits and benefits for the employee of that flexibility, keeping more people in work for longer, having more people in the labour market, so those are good things.

‘But of course, we are not going to dictate, it doesn’t work for everyone, but the process will be improved by this legislation.’

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.’

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 some 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’.

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’ Pictured: Deputy Prime Minister and Levelling Up, Housing and Communities Secretary Angela Rayner

However, another senior union leader has described parts of the Government’s new package on workers’ rights as having ‘more holes than Swiss cheese.’

Sharon Graham, general secretary of Unite, broadly welcomed the Bill, and the scrapping of ‘draconian’ laws such as the controversial Minimum Service Levels legislation.

But she added: ‘The Bill still ties itself up in knots trying to avoid what was promised.

‘Failure to end fire and rehire and zero hours contracts once and for all will leave more holes than Swiss cheese that hostile employers will use.

‘The Bill also fails to give workers the sort of meaningful rights to access a union for pay bargaining that would put more money in their pockets and, in turn, would aid growth.

‘Unite will continue to make the workers’ voice heard as we push for improvements to the legislation as the Bill goes through parliament.’