Repeal the Employment Rights Act

Regulation baseline

The baseline is the Employment Rights Act 2025 and its impact assessments. Repeal would lower some business compliance and labour-cost pressures, but remove protections for insecure workers.

• Direct fiscal effect is small.
• Business costs fall more than public costs.
• Workers lose statutory protections.

Core trade-offs

Employers gain flexibility and lower compliance costs. Workers with insecure contracts or weaker bargaining power lose protections, and some costs shift into lower income security rather than public budgets.

• Employers gain flexibility and lower costs.
• Some workers lose rights and predictability.
• GDP effects depend on hiring versus insecurity.

Fiscal impact by 2028-29

-GBP 0.5bn to +GBP 0.8bn. Central estimate: -GBP 0.1bn.

• Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
• Main public effect is lower enforcement and tribunal spending.
• Lower worker income can reduce receipts.
• Business savings are not Exchequer savings.
• This is not an official costing.

Economic impact by 2028-29

• Jobs: Hiring flexibility may improve; insecure hours and turnover could rise.
• Wages: Worker bargaining power and income predictability likely weaken.
• Prices: Some employer costs fall; pass-through to consumers is uncertain.
• GDP / productivity: Could support hiring, but weaker job quality may reduce productivity and retention.

Assessment

Repeal is unlikely to transform the fiscal position because the direct public-finance effects are small. The main effect is distributional: lower compliance and labour costs for employers at the expense of workers who lose protections.

Confidence: Medium-low. Impact assessments identify channels; actual employer hiring and worker-welfare responses are uncertain.

Main risks

• Insecurity rises: Repeal can increase unpredictable hours and weaker worker bargaining power.
• Limited fiscal gain: Most savings accrue to firms, not directly to the Exchequer.
• Turnover costs: Lower job quality can raise churn and reduce firm-specific productivity.

Safeguards

• Separate fiscal and business-cost savings.
• Retain targeted protections for high-risk sectors.
• Monitor hours, turnover and tribunal claims.

Academic evidence

UK government evidence

Sources

• PolicyLens methodology: Repeal the Employment Rights Act Internal - PolicyLens, 2026
• Employment Rights Act 2025: impact assessments Impact assessment - Department for Business and Trade, 2026
• Economic and fiscal outlook: March 2026 Fiscal forecast - Office for Budget Responsibility, 2026
• The Costs of Wrongful-Discharge Laws Academic article - Autor, NBER, 2003
• The Regulation of Labor Academic article - Botero, Djankov, La Porta, Lopez-de-Silanes and Shleifer, Quarterly Journal of Economics, 2004
• Our Plan for Britain Party policy source - Conservative Party, 2026

Other Conservative policies

• Cut welfare spending by GBP 23bn
• Cut 132,000 Civil Service posts
• Create a 150,000-removals force
• Restrict social housing to UK nationals
• Cut overseas aid by GBP 7bn
• Cut net-zero subsidies by GBP 1.6bn
• Abolish stamp duty on main homes
• Abolish rates for high-street firms