The government’s Employment Rights Bill, the most significant expansion of worker protections in a generation, is beginning to come into force. By that, I mean it’s having an impact on recruiting in the UK.
Ministers have celebrated it as a landmark achievement, but early data from the labour market tells a more complicated story.
February’s KPMG/REC Report on Jobs showed permanent placements falling more slowly than they were at the end of 2025, but still still declining as a result of “weak market conditions and employer concerns over costs.”
Recruiters cited the new day-one unfair dismissal rights and the strengthened trade union access provisions as primary factors in client hiring caution.
This is not surprising. When the cost and legal risk of a hiring decision rise, rational employers hire less and more carefully.
The tragedy is that the insecure, low-paid workers the Bill was designed to help are likely to bear the largest share of the adjustment. Having already taken a hit thanks to the reduction in thresholds at which employer NI is payable early in 2025.
Firms operating on thin margins in retail, hospitality, and care will not absorb the new burden; they will reduce hiring which is exactly what the employment data shows us is happening.
The workers with the least bargaining power are the most exposed to the resulting contraction in opportunities.
None of this means worker protections are wrong in principle. It means that the pace, scale, and design of this particular package were based on the need to raise revenue, rather than create an environment in which incomes can grow.
The government had the evidence from comparable international reforms. It chose to prioritise raising money to fund insane levels of spending anyway.
Macro Aggressions 