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.
The government said the lower estimate reflects a series of late-stage concessions, including phasing in reforms over several years and changes made as policy design and evidence evolved since the original assessment was published in October 2024.
The legislation, which finally passed last month after a prolonged battle in the House of Lords, includes reforms such as tighter rules on zero-hours contracts, enhanced sick pay and changes to parental leave. However, one of Labour’s most contentious manifesto pledges – giving workers day-one rights to claim unfair dismissal – was dropped at the eleventh hour.
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