Labour workers' rights concessions slash expected cost to business, government analysis shows

"The cost to UK businesses of Labour's flagship overhaul of workers' rights has been cut by billions of pounds after ministers significantly watered down the legislation, according to the government's own updated analysis. A revised Whitehall impact assessment published on Wednesday estimates that the Employment Rights Bill will now cost employers around £1bn, a sharp reduction from earlier projections that put the figure as high as £5bn."

"However, one of Labour's most contentious manifesto pledges - giving workers day-one rights to claim unfair dismissal - was dropped at the eleventh hour. Instead, ministers introduced a six-month qualifying period, a move that helped break the parliamentary deadlock but angered some Labour backbenchers and trade unions. Sharon Graham, general secretary of Unite, previously described the final legislation as "a shell of its former self"."

"The concession followed negotiations involving six of the UK's largest business groups and trade unions, but has not fully satisfied employer groups. Kate Shoesmith, director of policy at the British Chambers of Commerce, said the revised £1bn estimate was "likely to be a massive underestimate". She warned that the government's figures failed to capture harder-to-quantify costs, including management time spent understanding the new rules, training staff and implementing revised processes."

Ministers substantially watered down planned employment reforms and phased changes in, reducing the estimated cost to employers from as much as £5bn to around £1bn in a revised Whitehall impact assessment. The Employment Rights Bill includes tighter rules on zero-hours contracts, enhanced sick pay and altered parental leave, but the pledge to grant day-one unfair dismissal rights was dropped in favour of a six-month qualifying period. The concession followed negotiations with major business groups and trade unions, but employer bodies say the £1bn figure likely understates implementation costs such as management time, training and revised processes, while union leaders criticised the dilution.

Read at Business Matters