As of 6 April 2026, the Employment Rights Act 2025 is the law of the land. Labour are celebrating. The unions are celebrating. Up and down Britain, small business owners are quietly closing their laptops and wondering whether it's still worth employing anyone at all. This is what "making work pay" looks like in practice: a bureaucratic sledgehammer swung at the heart of British enterprise.
What the Act Actually Does
Let's spell it out. Statutory Sick Pay now kicks in from day one — no more three-day waiting period, and the lower earnings limit has been scrapped, dragging more workers into the scheme. Paternity and parental leave are now day-one rights. Employers must keep records of annual leave and pay for six years, or face enforcement action. A brand new Fair Work Agency has been stood up to police minimum wage, holiday pay, modern slavery compliance, and "unlawful deductions" — effectively a new inspectorate with powers to march into your business.
That's before we get to the next tranche due in October — expanded sexual harassment duties that make employers liable for comments overheard from third parties. Or the January 2027 reforms to unfair dismissal that will apply from day one of employment. The direction of travel is unmistakable: more cost, more risk, more paperwork.
Who Actually Pays for This?
Every small business owner I speak to in Lancashire says the same thing. They love their staff. They want to treat them well. They already do. But every new regulation adds cost, and every new cost has to come from somewhere. It comes from prices. It comes from profit. It comes from jobs that don't get created. And increasingly, it comes from the decision not to hire at all — or to hire a contractor, or automate, or offshore.
The Institute of Directors and the Federation of Small Businesses have been sounding the alarm for months. The response from the Labour front bench? A shrug. They don't understand business because most of them have never been in one. Their idea of a working life is moving from student politics to a special adviser job to a safe seat, and they frame every conversation about employment as if it were a battle between heroic workers and villainous bosses.
The Fair Work Agency Problem
Let's talk about this new Fair Work Agency. Another quango, another budget, another layer of government sitting on top of businesses that already face HMRC, HSE, the Information Commissioner, local council licensing, and a dozen sector-specific regulators. Its remit is broad and vague — always a warning sign. Expect mission creep. Expect dawn raids. Expect a flood of vexatious complaints that the agency has every incentive to pursue because it justifies its own existence.
The agency will "oversee compliance." Fine words. In practice it means another official with a clipboard and a grievance telling a fifty-year-old plumber from Preston that his holiday-pay spreadsheet doesn't meet the prescribed format. And if he can't produce six years of records? Penalties.
What Reform UK Would Do
Reform UK would repeal the worst elements of the Employment Rights Act. We'd abolish the Fair Work Agency before its budget triples — as quango budgets always do. We'd cut the record-keeping burden on small businesses. We'd protect genuine worker rights — nobody wants a return to sweatshops — while recognising that over-regulation kills the very jobs those rights are meant to protect.
Labour thinks it's helping workers. In reality it's making employment so risky that small businesses will stop creating jobs, large employers will automate, and the young people entering the labour market in 2027 will find fewer opportunities than their parents had. You cannot protect workers by strangling the businesses that employ them. That lesson used to be obvious. Labour has forgotten it. Reform UK hasn't.