Government analysis shows the Employment Rights Act will strengthen worker protections
The Employment Rights Act 2025 is set to deliver a significant shift in the UK’s labour law framework, moving worker protections closer to international norms while stopping short of the levels seen in many comparable economies, according to new Government-commissioned analysis.
The assessment, published by the Department for Business and Trade and conducted by researchers at the University of Cambridge, examines the legal and economic implications of the Act using the Cambridge Centre for Business Research Labour Regulation Index. The report benchmarks UK labour law before and after the Act against the laws of OECD and EU countries
The Employment Rights Act became law on 18 December 2025 and forms a central pillar of the Government’s Make Work Pay agenda. It introduces wide-ranging reforms across unfair dismissal, zero hours contracts, statutory sick pay, trade union rights, family-related leave and workplace protections.
According to the analysis, the Act increases the UK’s overall labour regulation score by around five percent. While this uplift narrows the gap between the UK and the OECD average, the UK would remain less protective overall than both the OECD and EU averages once the Act is fully implemented.
The most pronounced changes arise in dismissal law. The Act reduces the qualifying period for unfair dismissal claims from two years to six months and strengthens protections in fire and rehire cases. These measures result in a marked increase in the UK’s dismissal law score, although the report notes the UK would still lag behind countries such as France and Germany.
In contrast, the Act positions the UK at or above the OECD average in certain specific areas. These include protections relating to zero-hour contracts, where new rights to guaranteed hours, advance notice of shifts and compensation for cancelled work are introduced. Family-related rights are also strengthened through day-one entitlements to paternity leave, parental leave and a new statutory right to bereavement leave.
The report also identifies significant changes to trade union rights, including expanded access to workplaces, reforms to recognition procedures and the repeal of recent restrictions on industrial action. However, the UK remains comparatively less protective in areas such as collective bargaining coverage and codetermination.
Alongside the legal analysis, the report examines economic impacts using econometric modelling based on historic data. It concludes that the Employment Rights Act is likely to have a small positive effect on employment levels, estimated at around a 0.1 percent increase. In areas where similar reforms have been adopted in other OECD countries, particularly in relation to zero-hour contracts, the report finds evidence of positive effects on both productivity and employment.
The authors emphasise that the Act represents a targeted reform rather than a wholesale transformation of UK labour law. While it raises protections in several key areas, it does not return the UK to the levels of regulation seen in the late 1970s, nor does it fully align the UK with continental European models.