Implement the Employment Rights Act: note

Central fiscal result

+£1.2bn - Net fiscal impact in 2028-29

Low case: +£0.3bn. High case: +£5.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Models implement the employment rights act by 2028-29.
• Baseline is current policy or published departmental plans.
• Central case uses published party or official anchors where available.
• Wider manifesto interactions are excluded unless stated.

Affected population

• Affected units are people, firms, households or providers depending on policy.
• Direct exposure follows the manifesto or government target group.
• Indirect exposure includes suppliers, workers, consumers and taxpayers.
• Weakest counts are widened in the low and high cases.

Gross impact

• Published anchor or scenario central is +£1.2bn in 2028-29.
• Gross costs or receipts are adjusted for behaviour and delivery risk.
• Tax, benefit or procurement offsets are separated in the fiscal build-up.
• The range is deliberately wider where implementation detail is thin.

Fiscal build-up, central case

• Gross programme or delivery cost: +£1.4bn
• Tax and receipt offsets: -£0.1bn
• Administration and evaluation: +£0.1bn
• Behavioural and pass-through effects: -£0.2bn

Central net impact: +£1.2bn in 2028-29.

Behaviour and pass-through

• Low case assumes stronger delivery or receipts than central.
• Central case applies moderate behavioural leakage and pass-through.
• High case allows weaker delivery, larger take-up or higher costs.
• Output effects follow incidence, capacity and investment channels.
• Distributional gains do not automatically imply GDP gains.

Phasing

• 2026-27: +£0.1bn. Phased implementation and take-up.
• 2027-28: +£0.7bn. Phased implementation and take-up.
• 2028-29: +£1.2bn. Phased implementation and take-up.
• 2029-30: +£1.2bn. Phased implementation and take-up.

Main source groups

• Autor, Donohue and Schwab, "The Costs of Wrongful-Discharge Laws" (Review of Economic Studies, 2006): Wrongful-discharge protections increased firing costs and affected firm employment decisions; relevant to worker-rights reforms.
• Bassanini and Duval, "Unemployment, Institutions, and Reform Complementarities" (Economic Journal, 2009): Employment protection can interact with bargaining, taxation and active labour-market policy; relevant to broad employment-rights design.
• HM Treasury, "Budget 2025" (2025): Budget 2025 sets out implemented welfare, energy, motoring and tax-threshold measures; used for current government delivery policies.
• Department for Business and Trade, "Employment Rights Act implementation roadmap" (2025): The roadmap phases implementation of workplace-rights measures during 2026 and 2027; used for timing and scope.
• Department for Business and Trade, "Employment Rights Act economic analysis" (2025): The analysis estimates employer, worker and regulatory effects, warning against simple summation; supports wider ranges and interaction risks.
• Labour Party, "Change: Labour Party Manifesto 2024" (2024): Used to define the pledge wording, policy scope and implementation scenario being modelled.