Ban fire and rehire: calculation note

Central fiscal result

+£0.8bn - Net public-finance impact in 2027-28

Low case: +£0.1bn. High case: +£4.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Prohibit dismissal and re-engagement to impose worse terms except in genuine insolvency rescue.
• 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 employers using dismissal-and-reengagement threats.
• Official affected count is not the whole economy.
• Public fiscal exposure comes through public employers and contracts.
• Distressed firms create the largest economic risk.

Gross impact

• ERA Table A10 gives fire-and-rehire cost around £0.098bn EANDCB.
• Central adds public HR, tribunal and procurement costs.
• Employment/welfare risk is £0.30bn central.
• Tax offsets are small and uncertain.

Fiscal build-up, central case

• Public-sector HR and legal costs: +£0.15bn
• Tribunal and Acas capacity: +£0.15bn
• Public procurement pass-through: +£0.30bn
• Employment and welfare risk: +£0.30bn
• Tax and NI offsets: -£0.10bn

Central net impact: +£0.8bn in 2027-28.

Behaviour and pass-through

• Low case assumes narrow abusive-use ban.
• Central assumes broader ban with rescue exception.
• High case assumes more redundancies and disputes.
• Firms may shift to layoffs or insolvency.
• No retention saving is deducted.

Phasing

• 2026-27: +£0.2bn. Guidance and disputes.
• 2027-28: +£0.8bn. Full ban applies.
• 2028-29: +£0.9bn. Case law develops.
• 2029-30: +£1.0bn. Restructuring adjusts.

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.
• HM Treasury, "Whole of Government Accounts 2023-24" (2025): Whole of Government Accounts report £240.5bn staff costs and £263.7bn purchases in 2023-24; anchors paybill and procurement exposure.
• 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.
• 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.