Workers’ Rights: Delays to New Laws & Business Concerns

Controversial plans to hand new employees a glut of new rights from day one and make flexible working the default will not be implemented until 2027, the government has said, after a deluge of warnings from industry that the measures would stifle firms’ ability to hire and invest.

As part of the long-awaited roadmap for its workers’ rights overhaul, the Department for Business and Trade confirmed that some the bill’s more contentious measures would not come in for at least two years, to give employers time to adjust while the government continues consultations.

Changes to improve workers’ rights from day one – such as protection from unfair dismissal – as well as the changes to flexible working and ending ‘exploitative’ zero-hours contracts were all put in the final phase of the policy’s rollout in 2027.

The reprieve will come as a relief to the industry bodies and business owners that had warned the three measures would pose a major barrier to firms’ prospects. The so-called ‘Big Five’ business lobby groups made a rare joint intervention to warn in April that, unchanged and implemented too quickly, they would harm growth and dent living standards.

Last week the Tories vowed to “rip up” the entire package of measures if they win the next election, with shadow business secretary Andrew Griffith warning that the Bill will hand “enormous power” to trade unions who will “grind the economy to a halt”.

No major delays to sick pay changes for business

But other measures that UK plc had warned against will be introduced sooner. Plans to repeal the Conservatives’ strikes (minimum service levels) act 2023, will go ahead immediately after the package is passed by parliament, though the more structural overhaul of industrial relations the government has promised will not take place until 2027.

Meanwhile proposals to make staff eligible for statutory sick pay from day one of their illness – another major point of contention among employers – will be brought in among the earlier rafts of measures, in April next year.

Small businesses have previously called for a rebate on those payments as a means of encouraging them to keep taking on new staff. And 120 bosses from the facilities management sector wrote in an open letter that the statutory sick pay changes posed a “new, immediate cost on employers” like them, in a sector reliant on tight margins and “stringent contracts”.

Notable measures such as the establishment of the Fair Work Agency – that will oversee the overhaul’s enforcement – and bolstering ‘day one’ paternity and parental leave rights will be introduced in April 2026. Others, like ending so-called fire and rehire practices and obliging firms to protect staff from harassment from third parties – branded the ‘banter ban’ by opponents, will come into force the following October, the roadmap confirmed.

Business secretary Jonathan Reynolds said the phased implementation demonstrated the government’s “collaborative approach” that balanced the realities of running a business with creating more productive workplaces.

“Since the beginning, we have been working with businesses big and small to ensure this Bill works for them, and this roadmap will now give them the clarity and certainty they need to plan, invest and grow,” he added.

The package in the round was a flagship part of the Labour party’s pre-election manifesto, promising workers “the biggest upgrade to workers’ rights in a generation”.

Deputy prime minister Angela Rayner, who is spearheading the reforms, said: “These landmark reforms will kick in within months, demonstrating our commitment to making work pay for millions of workers across the country and delivering real change.”