Labour’s Employment Rights Act: April 2026 Burdens That Will Kill Jobs and Growth

Every Labour government in history has ended up pushing the same big idea: that unemployment can be cured by making it harder to fire people, more expensive to hire them, and more risky to employ them at all. And every Labour government in history has ended up raising unemployment as a result. The Employment Rights Act 2025 — whose next tranche of provisions takes effect this month — is simply the latest chapter in a very old story.

What Hits This Month

The April 2026 rollout includes day-one unfair dismissal rights, new statutory sick pay rules from the first day of absence, further guardrails around zero-hours contracts, and expanded probation-period restrictions. Each of these, on its own, sounds reasonable. Taken together, they amount to a fundamental restructuring of the labour market — and one that will fall hardest on precisely the businesses least able to cope with it.

Day-one unfair dismissal rights mean that from the moment an employer makes a hire, they are legally exposed. One mistake, one bad fit, one cultural mismatch — and the legal process is activated. The Resolution Foundation estimates that businesses will face up to 15% higher HR compliance costs as a direct result. For a small firm running on thin margins, that is not a rounding error. That is the difference between growth and survival.

Who Actually Pays

Labour will tell you this protects workers. In reality, it protects workers who already have jobs at the expense of workers trying to get them. When the cost of hiring goes up, employers hire less. They replace people with automation. They move marginal roles offshore. They shift to agency work, contracting, and self-employment. The Employment Rights Act, in other words, is anti-employment.

The CBI, the Federation of Small Businesses, and the Institute of Directors have all warned of the same thing: this legislation will reduce job creation, especially among young people, the long-term unemployed, and those without formal qualifications — the very groups Labour claims to champion. In Preston East, as across the country, small businesses tell me they are freezing hiring until they see how the new rules play out. That is not a theoretical cost. That is a real job that doesn't exist.

Stacked on Top of Everything Else

If the Employment Rights Act were the only burden being added to business this month, it would be manageable. But it isn't. Businesses are simultaneously absorbing the National Insurance rise from last year, a 4.1% minimum wage uplift, frozen thresholds, higher business rates, rising energy costs, and compliance bills from a dozen other regulatory reforms. Each is presented as modest. The cumulative effect is devastating.

This is how economies stop growing. Not through one catastrophic decision, but through a thousand small ones, each one defensible, all of them together suffocating. Labour is producing a UK economy where it is slightly more humane to be employed, and much harder to become employed. That is a very bad trade.

Where Are the Growth Measures?

The government tells us it wants growth. But almost every piece of legislation Labour has passed in the past year — the Employment Rights Act, the tax rises, the regulatory expansions, the net zero mandates — pushes in the opposite direction. If you were deliberately trying to design an economy with weak business investment, low productivity, and rising unemployment, you would struggle to do a better job than this government has managed by accident.

Growth comes from confidence. Confidence comes from predictability. Predictability comes from a government that doesn't change the rules every six months. Labour has given businesses none of those things.

What Reform UK Would Do

Reform UK would take a very different approach. We would scrap the worst provisions of the Employment Rights Act — particularly the day-one dismissal rights that make every hire a legal risk. We would raise the National Insurance threshold so employers can afford to take a chance on younger workers. We would cut business rates for small firms. And we would end the regulatory expansion that turns every entrepreneurial idea into a compliance exercise.

We believe in workers' rights. We also believe in jobs. You cannot protect the first by destroying the second.

The April Warning

Every April brings a new batch of regulations. Every April, a few more small firms decide it isn't worth it. Every April, a few more entrepreneurs head for Dubai. This cannot continue. Britain needs a government that believes in business, not one that treats business as a problem to be managed.