IoD Urges UK to Delay Employment Rights Act as 86% of Leaders See Growth Hit
Updated
Updated · Personnel Today · May 27
IoD Urges UK to Delay Employment Rights Act as 86% of Leaders See Growth Hit
2 articles · Updated · Personnel Today · May 27
86% of business leaders now say the Employment Rights Act will hurt economic growth, up from 72% in 2025, prompting the Institute of Directors to press for a slower rollout.
The IoD says employers have had too little time to prepare because parliamentary delays compressed implementation and key details still remain unclear, including the reference period for guaranteed-hours contracts.
63% of member employers said in February they were less likely to hire, up from 49% in May 2025; 57% said they were more likely to automate and 40% to outsource roles overseas.
The group wants firms with fewer than 250 staff exempted from union-access rules, the guaranteed-hours reference period extended to 52 weeks, and a sick-pay rebate restored for small companies.
The lobbying push argues the Act, alongside higher employer national insurance and a higher national living wage, is weakening hiring just as the government targets an 80% employment rate.
With firms cutting jobs over new labor laws, are worker rights coming at the cost of employment itself?
Can new worker protections succeed without crippling the small businesses that drive the UK's economic growth?
Are new UK worker rights pushing businesses towards automation, permanently shrinking the job market?
Employment Rights Act 2025: Balancing Worker Protections and Business Realities in the UK
Overview
The Employment Rights Act 2025 brings major changes to the UK labor market, directly affecting businesses by introducing new rules and oversight. Central to these reforms is the creation of the Fair Work Agency, launching in April 2026 under Matthew Taylor, which will enforce the Act and ensure compliance. One key measure is the ban on non-disclosure agreements that previously kept harassment and discrimination cases hidden, aiming to make workplaces more transparent and accountable. These changes signal a shift toward stronger worker protections, while also presenting new challenges and costs for employers as they adapt to the evolving regulatory landscape.