Friday, January 9, 2026- A new government impact assessment shows the cost of major workers’ rights reforms has been sharply reduced, cutting the expected financial burden on businesses by billions.
Updated estimates now put the annual cost to UK companies at around £1 billion, down from earlier projections of up to £5 billion. The reduction follows a series of concessions and revised timelines agreed after sustained engagement between ministers and business groups.
Several key elements of the Employment Rights Act were adjusted to ease pressure on employers while keeping the core reforms intact. Changes include delaying the rollout of certain rights and revising provisions such as qualifying periods for unfair dismissal claims.
These adjustments were designed to reduce immediate costs and operational strain, though some business leaders continue to warn about ongoing compliance and administrative expenses.
Despite the lower cost estimate, the government maintains that the reforms remain economically beneficial. Officials argue the package will support growth by improving job security, strengthening workforce participation, and raising productivity.
Supporters say the revised approach strikes a balance between protecting workers and maintaining business competitiveness, positioning the labour market for more sustainable long-term growth.
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