PolicyLens

Methodology note

Repeal the Employment Rights Act: calculation note

Scenario assumptions behind the Repeal the Employment Rights Act estimate. The figures are illustrative and exclude unrelated Conservative pledges.

View main policy page: Repeal the Employment Rights Act

Central fiscal result

-GBP 0.1bn - Net fiscal impact in 2028-29

Low case: -GBP 0.5bn. High case: +GBP 0.8bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Model repeal of the 2025 Act by 2028-29.
  • Central fiscal saving is small: GBP 0.1bn.
  • Baseline uses DBT impact assessments for the Act.
  • Business-cost changes are not treated as Exchequer savings.

Affected population

  • Affected population is employers and workers covered by the Act.
  • Direct employer gains are compliance and flexibility benefits.
  • Direct worker losses include weaker rights and predictability.
  • Public fiscal channels are tribunal, enforcement and tax effects.

Gross impact

  • Central public saving from enforcement/admin: GBP 0.2bn.
  • Lower worker income and receipts offset about GBP 0.1bn.
  • Business-cost reductions are shown separately from fiscal impact.
  • No hiring boom is fiscal-scored.

Fiscal build-up, central case

  • Lower enforcement and tribunal costs: -GBP 0.2bn
  • Lower tax from weaker worker income: +GBP 0.1bn
  • Administration transition: GBP 0.0bn
  • Business compliance savings: GBP 0.0bn

Central net impact: -GBP 0.1bn in 2028-29.

Behaviour and pass-through

  • Low case assumes business flexibility modestly raises employment and receipts.
  • Central case assumes small net fiscal effect.
  • High case assumes lower worker income and higher insecurity reduce receipts.
  • Employer cost savings are not public savings.
  • Pass-through to lower prices is uncertain.

Phasing

  • 2026-27: GBP 0.0bn. Preparation or partial implementation.
  • 2027-28: -GBP 0.1bn. Main ramp-up year.
  • 2028-29: -GBP 0.1bn. Target-year central estimate.
  • 2029-30: -GBP 0.1bn. Continuation at steady-state assumptions.

Main source groups

  • con-plan-2026: Conservative live policy page; used to identify current pledge wording.
  • employment-rights-ia-2026: DBT impact assessments; employment-rights business-cost baseline.
  • obr-efo-mar-2026: OBR March 2026 forecast; fiscal and macro baseline.
  • autor-2003: Dismissal law costs; informs behavioural and incidence assumptions.
  • botero-et-al-2004: Labour regulation evidence; informs behavioural and incidence assumptions.