After Angela Rayner’s exit from government, what’s the future for employment rights in the UK?
- Written by Rachel Scarfe, Lecturer in Economics, University of Stirling
After the resignation of Angela Rayner[1], the UK government faces an urgent question: what will happen to its flagship employment rights bill? The former deputy prime minister was an important champion of the bill – and businesses have seized an opportunity to call for it to be diluted[2]. At the same time, unions are pressing hard in the opposite direction.
Shortly after Labour won office in 2024, prime minister Keir Starmer[3] described the bill[4] as “the biggest levelling up of workers’ rights in a generation”, adding it was designed to give people “security, dignity and respect at work”.
In its manifesto, Labour had promised to “make work pay”[5] – so the ambitious draft bill introduced in October 2024 contained 28 reforms to employment rights. These include requiring employers to guarantee workers a minimum number of hours; strengthening redundancy rights; rights to parental leave and protection from unfair dismissal from a worker’s first day; and expanding trade union rights.
Not only are the changes wide-ranging, they also affect a very large number of workers. There are, for example, nine million people[6] in the UK who have been in their job for less than two years and who will gain the right to claim unfair dismissal.
The bill passed the House of Commons in March 2025. The House of Lords made some important amendments, giving workers a “right to request” rather than a “right to have” guaranteed working hours, increasing the qualifying period for unfair dismissal to six months (rather than one day), and reinstating the previous 50% turnout threshold for a trade union to vote for industrial action.
The planned legislation addresses a clear problem in the UK. In-work poverty and precarious work (characterised by low wages, uncertain income and insecurity) have been increasing. More and more people do not earn enough to make ends meet – between 1996 and 2024 the proportion of people in poverty who lived in families with at least one person working[7] increased from 44% to 65%.
This is expensive – benefits paid to working people cost the government around £50 billion a year[8].
Introducing the bill, Rayner described it[9] as “pro-growth, pro-business, pro-worker”. The UK’s slow productivity growth[10] has been a problem since the financial crisis, and the government hopes that the better retention and higher job satisfaction that the bill could bring about will increase productivity. This view is broadly supported by academic research[11].
The government estimates that the bill will cost businesses between £900 million and £5 billion[12] annually. This seems small, especially in comparison to total wage costs in the UK of more than £1.3 trillion[13].
However, it was introduced at a time when employers’ costs were already increasing. In April 2025, employers’ national insurance[14] contributions increased from 13.8% to 15%[15] of earnings, and the threshold for paying contributions fell from £9,100 a year to £5,000.
The minimum wage[16] increased from £11.44 to £12.21 per hour for those over 21 and from £8.60 to £10 per hour for 18 to 20-year-olds. These changes hit sectors with lots of young, low-paid workers – hospitality and retail, for example – hardest. Employers in these sectors often use flexible working (such as zero-hours contracts) to offset the costs[17] of higher minimum wages.
If this becomes more difficult because of restrictions imposed by the bill, employers can attempt to pass increased costs on to customers by raising prices. But if food prices increase, for example, this will hurt lower-paid workers (who spend a high proportion of their income on food) – the very people the bill is intended to help.
Of course, not all employers can pass on higher costs. Universities, for instance, have already estimated that national insurance increases cost them £430 million per year[19].
Restrictions to “fire and rehire” (where employers fire employees and rehire them under different terms, such as less generous pensions) may affect[20] employers looking to restructure. In such cases, employers may instead cut jobs. With the number of UK vacancies falling for three years[21], this could accelerate the decline.
The UK’s new business secretary, Peter Kyle, has taken over the role of supporting the bill through parliament. He has previously supported it, although he has also committed to lowering regulation[22], which is seemingly at odds with this bill.
Both business and union leaders are lobbying hard ahead of the Commons debate on September 15. Unions are demanding Labour MPs be whipped to oppose the Lords’ amendments, and some have threatened to disaffiliate[23] from the party if not. For now, the government insists it will pass the bill and reject the amendments. But businesses will hope that new ministers will be more sympathetic to their concerns.
There are still lots of details to be worked out. For example, the bill does not define what counts as the “minimum hours” workers would be guaranteed. With the timeline for introducing all the changes stretching to 2027, business leaders will have plenty of time to lobby for delayed implementation or to reduce its coverage.
References
- ^ Angela Rayner (theconversation.com)
- ^ be diluted (www.ft.com)
- ^ Keir Starmer (www.gov.uk)
- ^ the bill (www.gov.uk)
- ^ “make work pay” (labour.org.uk)
- ^ nine million people (assets.publishing.service.gov.uk)
- ^ one person working (www.health.org.uk)
- ^ £50 billion a year (ifs.org.uk)
- ^ Rayner described it (mhclgmedia.blog.gov.uk)
- ^ slow productivity growth (theconversation.com)
- ^ academic research (doi.org)
- ^ £900 million and £5 billion (assets.publishing.service.gov.uk)
- ^ more than £1.3 trillion (www.theguardian.com)
- ^ employers’ national insurance (theconversation.com)
- ^ 13.8% to 15% (www.gov.uk)
- ^ minimum wage (www.gov.uk)
- ^ offset the costs (www.resolutionfoundation.org)
- ^ 1000 Words/Shutterstock (www.shutterstock.com)
- ^ £430 million per year (www.universitiesuk.ac.uk)
- ^ may affect (www.universitiesuk.ac.uk)
- ^ falling for three years (www.ons.gov.uk)
- ^ committed to lowering regulation (www.gov.uk)
- ^ threatened to disaffiliate (www.cityam.com)
