Give day-one unfair-dismissal rights: calculation note

Central fiscal result

+£0.9bn - Net public-finance impact in 2027-28

Low case: +£0.2bn. High case: +£4.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Extend ordinary unfair-dismissal protection from six months to day one, with probation rules.
• Baseline is current law and published official data unless stated.
• Private business costs are excluded unless they affect tax or procurement.
• Target year is 2027-28, with later years shown separately.

Affected population

• Unit is employees with short tenure.
• ERA analysis cites 6.3m employees gaining protection.
• Model is beyond the six-month ERA baseline.
• Small firms and probation hires are most exposed.

Gross impact

• ERA analysis says unfair-dismissal reform protects 6.3m employees.
• Official day-one unfair-dismissal EANDCB is £0.042bn.
• True day-one extension adds behavioural and public HR costs.
• Central tribunal/enforcement pressure is £0.35bn.

Fiscal build-up, central case

• Public-sector HR and legal costs: +£0.25bn
• Tribunal and Acas capacity: +£0.35bn
• Employment and welfare risk: +£0.35bn
• Tax and NI offsets: -£0.10bn
• Business-cost fiscal spillover: +£0.05bn

Central net impact: +£0.9bn in 2027-28.

Behaviour and pass-through

• Low case assumes clear probation rules.
• Central assumes more claims and cautious hiring.
• High case assumes weak probation exceptions.
• Employers may screen harder before hiring.
• No retention saving is scored.

Phasing

• 2026-27: +£0.3bn. Guidance and tribunals.
• 2027-28: +£0.9bn. Rights take effect.
• 2028-29: +£1.0bn. Claims develop.
• 2029-30: +£1.1bn. Case law settles.

Main source groups

• Department for Business and Trade, "Employment Rights Act 2025 - Economic Analysis" (2026): The ERA economic analysis estimates around £1bn annual direct business cost before social-care bargaining; provides official baseline costs and affected groups.
• Department for Business and Trade, "Employment Rights Act 2025 impact assessments" (2026): The IA collection separates guaranteed hours, unfair dismissal, fire and rehire, union and equality measures; prevents treating broad rights packages as one undifferentiated pledge.
• Ministry of Justice, "Tribunal Statistics Quarterly: October to December 2025" (2026): Employment Tribunals received 13,000 single claims and had 58,000 open single cases in Q3 2025; shows enforcement capacity is already a binding risk.
• Autor, Kerr and Kugler, "Does Employment Protection Reduce Productivity?" (Economic Journal, 2007): Employment-protection changes can reduce productivity where firms face higher firing and adjustment costs; supports caution on policies that raise dismissal, scheduling or adjustment costs.
• House of Commons Library, "UK labour market statistics" (2026): Used to size the affected population, baseline economic quantities and sectoral exposure.
• DiNardo, Fortin and Lemieux, "Labor Market Institutions and the Distribution of Wages, 1973-1992" (Econometrica, 1996): Labour-market institutions can compress wage inequality through wage floors and bargaining power; useful for distributional channels, not for claiming free fiscal gains.
• Green Party of England and Wales, "Workers' Charter 2026" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.