Employment Rights Bill: RPC opinion (red-rated)
Regulatory Policy Committee’s opinion on the impact assessments (IA) for the Employment Rights Bill.
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The Bill makes provision: to amend the law relating to employment rights; about procedure for handling redundancies; about the treatment of workers involved in the supply of services under certain public contracts; for duties to be imposed on employers in relation to equality; about trade unions, industrial action, employers’ associations; about the enforcement of legislation relating to the labour market.
The Bill’s proposals are set out in a summary IA, and individually in 23 further IAs on specific measures. The RPC has assessed as ‘not fit for purpose’ eight of the 23 individual IAs; six of these are in the ‘highest impact’ measure category in the summary IA. The overall assessment for the IA is, therefore, ‘not fit for purpose’. Given the number and reach of the proposals, it would be proportionate for the IA to include labour market and broader macro-economic analysis to understand the overall impact on employment, wages and output, and particularly the pass-through of employer costs to employees and other dynamic impacts. Eight individual IAs and the summary IA need to provide further analysis and evidence in relation to the rationale for intervention, identification of options (including impacts on small and micro-businesses) and/or justification of the chosen way forward. The issues are summarised in the main body of the opinion and are provided in detail at its Annex A.
The Department for Business and Trade published an updated economic analysis and summary impact assessment for the Employment Rights Act on 7th January 2026. The RPC has not scrutinised this enactment stage IA (and is not required to do so under the Better Regulation Framework). We note that the updated IA includes new content which seeks to respond to our ‘not fit for purpose’ opinion.
The updated IA includes more analysis of the broader macroeconomic impacts on wages, employment and output through the use of Computable General Equilibrium (CGE) and other econometric modelling. It also includes: a strengthened literature review with additional discussion of market failures and equity considerations to support the rationale for intervention; more justification for the assessment of impacts in the regulatory scorecard; and a more developed programme of monitoring and evaluation activities for the measures within the Act.