Employment Rights: Impact on Businesses

Debate between Steve Barclay and Kate Dearden

Tuesday 16th September 2025 Westminster Hall

[Kate Dearden]

I was just about to get to that point. I thank the shadow Minister for the reminder.

I pay tribute to my predecessor for all his work and to the officials and colleagues who worked with him. Many Members of this House and the other place engaged constructively with the team, and their insight has materially shaped the Bill. I thank them for their valuable insights. Likewise, the Bill has been shaped by extensive engagement from external stakeholders, businesses, trade unions and civil society alike. I thank them all for their engagement to date, and I reassure them that this Government remain committed to full and proper consultation on the Bill’s implementation.

I declare my interest as a proud trade union member. I look forward to working with trade unions, businesses and all stakeholders, and to continuing the positive engagement that many stakeholders have had with the Department and with this Government so far.

The Government were elected on a manifesto that committed to implementing “Labour’s Plan to Make Work Pay” in full and to putting more money in working people’s pockets. The Employment Rights Bill is the legislative backbone of that promise. We will deliver the single biggest upgrade of workers’ rights in a generation. That is good for workers and good for business, because we believe that a strong package of workers’ rights and protections go hand in hand with a strong economy. Many good employers already know that. When staff feel secure, they stay longer, are more productive and help the business to succeed. The Bill will help to make that the norm across the economy.

Our first mission as a Government is to deliver economic growth in every single part of the country. The Employment Rights Bill is a vital step. It represents a cornerstone of our mission to grow the economy, and it is designed to modernise the UK labour market, raise living standards and support long-term growth.

Securing that growth is worth doing only if working people actually feel the benefits of it in their pay, in their security and in their daily lives. Too many people face practices that undermine both their security and our economy, from fire and rehire to zero-hours contracts and last-minute shift cancellations. Those practices breed insecurity, and insecurity stifles productivity.

That is why the Bill is at the centre of the Government’s plans and is so significant. It will benefit at least 15 million workers, or half of all UK workers, protecting them from those practices and providing economic safety for the lowest paid in our labour market.

Let us consider a few of the changes that the Bill will bring. Some 9 million employees will gain protection from unfair dismissal, not after two years, but from day one. Workers in some of the most deprived parts of the country will keep hundreds of pounds a year in their pockets instead of losing them to the hidden costs of insecure work, and nearly 1 million more people each year will benefit from bereavement leave when they lose a loved one.

I thank the hon. Member for York Central (Rachael Maskell) for her comments in support of the Bill and of the Government’s work in this area, and for her work on the impact of bullying in the workplace over a number of years. I would be happy to meet her to discuss those matters further.

Economic impacts were a key part of the contribution of the hon. Member for Spelthorne. Some still argue that stronger rights are a cost, but I reject that. Stronger rights are an investment in people, in stability and in long-term growth. As set out in the Government’s published impact assessments for the Bill—I will respond in detail to his points on that—there are clear, evidence-based benefits to tackling issues holding back the UK labour market, which will have a positive impact on economic growth and will help to raise living standards across the country.

[Steve Barclay]

I join colleagues in welcoming the Minister to her place. She said in her reply to my hon. Friend the Member for Spelthorne (Lincoln Jopp) that there would not be an additional cost, but the Association of Directors of Adult Social Services has raised concerns about the additional costs and the funding gap, given that it will fall on local authorities and will therefore, in turn, require Government support. Could she clarify what she expects to be the extra cost of the Bill in terms of social care?

[Kate Dearden]

I am happy to come back to the right hon. Member on the particular social care interests and concerns that he might have.

Improving worker wellbeing, supporting productivity, reducing workplace conflict and creating a more level playing field for good employers would grant significant benefits, worth billions of pounds per year. That is why delivering the benefits of the Bill would offset the costs. That assessment is shared by organisations such as the Resolution Foundation. The £5 billion figure from our impact assessment, which the hon. Member for Spelthorne mentioned, is a top-end estimate of that cost, and will largely represent a direct transfer to the lowest paid in society, with the central estimate close to £1 billion. Even if we take that high-end estimate, the costs are therefore likely to be less than 0.4% of our national wage bill, and could even be as low as 0.1%. That is our best estimate at this stage.