A government impact assessment indicates that concessions made on proposed workers' rights reforms are projected to reduce the associated costs for businesses by billions of pounds. An initial analysis estimated the annual cost to firms at up to £5 billion. However, an updated assessment released on Wednesday revised this figure to £1 billion per year, reflecting significant adjustments to the proposals.
Key Concessions and Policy Details
The Employment Rights Act aims to provide workers with access to sick pay and paternity leave from their first day of employment, alongside new protections for pregnant individuals and new mothers.
In November, a key change involved altering the right to claim unfair dismissal. Original plans for immediate eligibility were revised, establishing enhanced protections after six months of employment as the bill's most substantial measure.
Further concessions include the gradual implementation of the overall package over several years, with numerous measures still subject to consultation and secondary legislation. The revised impact assessment also cited clearer implementation timelines and increased policy evidence as factors contributing to the lower cost estimate.
Responses to the Revised Assessment
Business groups have acknowledged the concessions. However, the British Chambers of Commerce stated that the £1 billion figure is likely "a massive underestimate." Policy director Kate Shoesmith noted that the estimate may not adequately account for less quantifiable expenses such as staff time required for understanding and implementing new processes.
Andrew Griffith, the shadow business and trade secretary, commented that the act would cost businesses billions and could impact employment for young and vulnerable individuals.
Trade unions have expressed approval of the latest impact assessment. The Trades Union Congress (TUC) described the reforms as beneficial for UK workers, the economy, and society, asserting that stronger workplace rights drive labour market participation, improve health, raise productivity, and boost demand. Paul Nowak, TUC general secretary, urged swift and robust implementation of the measures.
Mike Clancy, general secretary of the Prospect trade union, affirmed that the assessment demonstrates the Employment Rights Act's positive impact on workers, economic growth, and society, citing the success of compromises between government, businesses, and unions in making the legislation workable while providing worker protections.
Projected Economic and Employment Impacts
The latest impact assessment also projects a small positive effect on employment, estimating a 0.1% increase in the number of people in work. It further suggests that the new measures could have a "small, positive direct impact on economic growth." The analysis indicates that approximately 18 million workers could benefit from stronger rights, an increase from an earlier estimate of around 15 million.