The CIPD is urging the government to provide clear guidance and support for employers as amendments to the Employment Rights Bill raise concerns about increased costs and workforce reductions.
A survey of more than 2,000 employers by the CIPD found that 79 percent expect the new measures to lead to higher employment costs.
Key areas of concern include changes to unfair dismissal rules, Statutory Sick Pay reforms and guaranteed hours for zero-hours contract workers. Among those expecting cost increases, 30 percent anticipate managing these by reducing staff numbers through redundancies or lower recruitment, while 23 percent plan to introduce or expand automation. Other measures include cutting training budgets (22%), reducing working hours (17%) and increasing the proportion of temporary workers (17%).
The planned removal of the unfair dismissal qualifying period and the introduction of a statutory probation period are among the most contentious proposals. The CIPD’s research indicates that these changes could drive employers to reduce headcounts and notes the need for detailed government guidance to help businesses adapt.
Employment Rights Bill and Compliance Challenges
The bill also proposes changes to trade union rights, making it easier for unions to gain recognition and access workplaces. Trades Union Congress (TUC) General Secretary Paul Nowak welcomed the news, saying, “Union-busting has no place in modern Britain. Corporate bully boys like Amazon throw everything at trying to stop workers from having an independent voice at work. This Bill will help to stop these sorts of egregious tactics and will mean more workers benefit from a union voice.”
The CIPD says that the trade union rights changes will require employers and unions to develop “effective social partnership and employment relations skills”.
Employers are concerned about the potential complexity of these changes, particularly in light of recent cost pressures, including increased employer National Insurance contributions, the rising National Living Wage and higher business rates. The government’s impact assessment estimates that the bill could lead to a 15 percent rise in employment tribunal claims, placing further strain on the system.
To mitigate these challenges, the CIPD is calling for meaningful consultation with employers before secondary legislation is finalised. It is also urging the government to develop an implementation plan to ensure businesses, especially smaller firms with limited HR resources, understand their new obligations and avoid accidental non-compliance.
Calls for Additional Support and Resources
CIPD Chief Executive Peter Cheese, who attended the government’s tripartite meetings on the bill, underlined the importance of phased implementation and employer support.
“Our research shows that employers are already starting to seriously think about how the Employment Rights Bill could affect their workforce plans and costs, even without the full detail being clear and it not being implemented for at least another 12 months,” he said.
He added that while the phased approach is welcome, businesses need sufficient time and resources to prepare. Without clear implementation plans, effective consultation and proper enforcement, Cheese said, the bill could unintentionally undermine the UK’s labour market.
To support employers, the CIPD has called for additional funding for Acas, the Central Arbitration Committee and employment tribunals to manage the expected rise in demand for guidance and dispute resolution. In its recent spending review submission, the CIPD outlined the need for increased resources to prevent delays and ensure businesses can comply with the new legislation.
Employers Seek Clarity on New Regulations
When asked what support would be most useful in managing the impact of the Employment Rights Bill, 40 percent of employers said they need government guidance on implementing the changes.
A third (33%) expressed a preference for guidance from professional bodies such as the CIPD, while 34 percent said they would benefit from training materials for HR teams and managers. A further 31 percent of employers said they require support in developing workplace policies to align with the new legal requirements, underscoring the role of HR in managing compliance and policy updates.
While 32 percent of businesses expecting cost increases plan to improve productivity and efficiency, 42 percent anticipate raising prices to offset the financial impact. Additionally, 26 percent report they will scale down investment or expansion plans, while the same number expect to slow wage growth outside of National Living Wage adjustments.
