Employment Rights Bill: A Landmark Move to Boost UK Productivity and Economic Growth

The UK Government has tabled significant amendments to the Employment Rights Bill, marking what it calls the “biggest upgrade to workers’ rights in a generation.” This move is central to the Government’s Plan for Change, which aims to build a more secure, inclusive, and productive economy—one that works better for both workers and businesses.

Led by the Department for Business and Trade, with key announcements from Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds, the Bill incorporates weeks of consultation with employers, trade unions, and civil society. The changes promise to balance stability for businesses with greater protections for workers.

Making Work Pay: A Core Pillar of Economic Renewal

The Government’s amendments are designed to tackle long-standing issues in the UK labour market—low pay, insecure jobs, and limited worker protections. The goal is to enhance job quality, increase worker confidence, and ultimately boost productivity and economic growth.

Angela Rayner emphasized:

“We are turning the tide—with the biggest upgrade to workers’ rights in a generation, boosting living standards and bringing with it an upgrade to our growth prospects and the reforms our economy so desperately needs.”

Key Reforms Under the Employment Rights Bill

The new amendments address a wide range of employment issues. Here are the most significant changes:

1. Zero-Hours and Agency Work

• Workers, including 900,000 agency staff, will gain access to contracts that reflect their actual working hours.
   
• Measures will guarantee reasonable notice for shift changes and compensation for short-notice cancellations, reducing exploitation while preserving workforce flexibility.
   

2. Statutory Sick Pay (SSP) Reform

• For the first time, Statutory Sick Pay will become a legal right for all workers, including those on low incomes.
   
• Eligible workers will receive 80% of their average weekly earnings or the current SSP rate, whichever is lower.
   
• SSP will also be available from the first day of illness, helping prevent the spread of illness at work and improving recovery time and productivity.
   

3. Collective Redundancies

• Maximum protective awards for unfair redundancy processes will increase from 90 to 180 days.
   
• New guidance will help employers navigate proper consultation processes, strengthening compliance and deterring misuse.
   

4. Umbrella Company Regulation

• Workers employed via umbrella companies will be guaranteed rights and protections equivalent to those directly employed by agencies.
   
• Enforcement measures will target non-compliant firms to protect worker rights and ensure a fair market.
   

5. Modernising Industrial Relations

• Updates to trade union laws will better reflect modern work practices.
   
• The framework will emphasize collaboration, proportionality, and accountability between workers and employers

Business and Labour Reactions

Paul Nowak, TUC General Secretary:

“These common-sense reforms will improve the quality of jobs, boost growth and put more money into people’s pockets… This is about creating a modern economy that works for workers and business alike.”

Jane Gratton, British Chambers of Commerce:

“There is much here to welcome as sensible moves… but businesses remain cautious. The Bill must remain proportionate and affordable.”

Chris O’Shea, CEO, Centrica:

“Stronger rights for workers mean stronger businesses, and that’s a win for everyone.”

Julie Abraham, CEO, Richer Sounds:

“Happy colleagues are more productive. We support any legislation that will help end exploitative working practices.”

Ann Francke OBE, CEO, Chartered Management Institute:

“The real key to success will be the ability of skilled managers to implement these changes… We look forward to working with the Fair Work Agency.”

Research and Economic Justification

According to an impact assessment published last year, the Bill’s provisions are expected to have a “positive but small” impact on growth, mainly by improving job quality and boosting living standards.

Professor Simon Deakin from Cambridge University supported this outlook:

“Strengthening employment laws has had pro-employment effects and contributes positively to productivity and inclusive growth.”

Enforcement and Implementation

To support compliance and ensure fair implementation, the Government will empower a newly structured Fair Work Agency. The agency will:

• Crack down on rogue employers.
   
• Provide guidance and support for responsible businesses.
   
• Ensure a level playing field in the UK labour market

Looking Ahead: A Decade of National Renewal

Business Secretary Jonathan Reynolds underlined the broader ambition:

“This is about stability, investment, and reform. We are putting more money in working people’s pockets and giving business the confidence to hire.”

By fostering a modern employment environment that benefits all stakeholders, the Government aims to deliver a decade of national renewal, where fair pay and secure jobs are not exceptions but expectations.

As consultations continue and detailed policies are rolled out, the Employment Rights Bill represents a major milestone toward a high-skill, high-growth economy—one that puts people, productivity, and prosperity at its heart.

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