Labour workers' rights concessions to cut cost to business by billions, analysis shows

"Labour watering down its sweeping overhaul of workers' rights is expected to slash the cost of the plan for UK businesses by billions of pounds, the government's own analysis shows. According to an updated Whitehall impact assessment published on Wednesday, concessions by ministers could reduce the cost of the employment rights bill for businesses to about 1bn. An earlier version of the document had suggested the package, which includes day-one employment rights and banning zero-hours contracts, could have cost firms up to 5bn."

"In its revised analysis, the government said the new lower estimate reflected a decision to phase in the changes over several years, as well as the fact that policy design and evidence have developed since its last assessment, in October 2024. Labour's employment rights bill finally became law last month after a lengthy legislative battle in the House of Lords, amid fierce business lobbying and after the government made a last-minute U-turn on an important element of the plan."

Whitehall analysis shows concessions by ministers could reduce the cost of the employment rights bill for businesses to about 1bn, down from an earlier estimate of up to 5bn. The lower estimate reflects phasing the changes over years and policy design and evidence since October 2024. The bill became law after a House of Lords battle and a last-minute U-turn abandoning day-one unfair dismissal rights for a six-month threshold. A deal between business groups and trade unions influenced the change. Some union leaders called the bill a shell, while businesses and Conservatives warned costs remain unacceptable, and the government acknowledged higher business costs for sick pay and paternity leave.

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