Employment Rights Act Impact Assessment Reaction
08.01.2026
The Government has now published its revised impact assessment of the Employment Rights Act 2025, following its passage through Parliament.
While further analysis of the legislation is welcome, manufacturers remain concerned that the assessment does not fully capture the cumulative and long-term costs for employers. With high employment costs and ongoing skills pressures, greater clarity on how new rights will be implemented and funded is essential for manufacturers planning future investment and workforce growth.
Read our reaction in full below.
Following the passage of the Employment Rights Act, it is welcome that the Government has revised its impact assessment of the legislation. However, the new assessment appears to give only a partial picture of the true costs facing employers.
"While retaining a six-month qualifying period for unfair dismissal will reduce costs, the impact is unlikely to be as significant as suggested, particularly given the lack of clarity around the removal of the compensation cap. Other costs, including those linked to guaranteed hours, also remain uncertain pending further policy decisions.
"With employment costs already a major risk to manufacturers' growth in 2026, the Government should work with industry to provide additional support, starting with a Statutory Sick Pay rebate for SMEs - one of the highest direct costs to employers.
