Some of the government’s impact assessments of the Employment Rights Bill were ‘not fit for purpose’ and the policies could lead to lower wages and fewer jobs.
According to a statement published by the Regulatory Policy Committee (RPC), whose role is to assess the quality of evidence and analysis used to inform regulatory proposals, the Bill didn’t have evidence that supported the problem being tackled.
It assessed eight of the 23 individual impact assessments submitted by the government related to the Bill, and found that eight of them were not fit for purpose. Six of these are in the highest impact measure category of the original assessment, it said.
The government published its initial impact assessment on 21 October, suggesting that the new legislation would have a positive impact on economic growth, but would also cost businesses £7.4 billion over the course of a decade.
Employment Rights Bill
Impact of Employment Rights Bill published as consultations launched
The RPC said the government needed to provide more evidence to support “an imbalance of power between employers and workers in certain sectors of the economy” as its rationale for introducing the Bill.
It also said there was not sufficient consideration of alternative options, and an “inadequate assessment” of how the Bill would impact small businesses.
Some of the individual impact assessments had “missing business impacts, lack of proportionate monetisation and insufficient assessment of key risks”, it added.
The areas with the weakest scrutiny in the impact assessments included day-one unfair dismissal rights, reforms to trade union legislation, flexible working and third-party harassment.
Looking at the overall cost of the reforms, the RPC said that “the direct impact on business estimate does not account for the likelihood employers may offset the costs of regulation and mandated benefits through wage adjustments, benefit reductions or other compensatory mechanisms which would eventually be borne by the employee”.
On unfair dismissal rights, the RPC criticised the initial impact assessment for not looking at options between the current two years before they kick in, and the proposed first-day rights that feature in the Bill.
On a day-one right to request flexible working, the RPC said the proposals could increase the likelihood of smaller employers being drawn into tribunal processes, adding that “risk-averse employers will factor in the increased cost/risk of rejecting requests… seeking to avoid costly employment tribunals”.
The government has launched a series of consultations that will inform which measures will be taken through to the final legislation, including around statutory sick pay, zero-hours contracts, industrial relations and fire and rehire.
Last week, shadow chancellor Mel Stride accused the government of “withholding” an impact analysis of the planned rises to employers’ national insurance, which are due to come into effect in April. The government has also been accused of not publishing an equality impact assessment on the withdrawal of winter fuel allowance for some pensioners.
A government spokesperson said: “This government has delivered the biggest upgrade to people’s rights at work in a generation. Our plan to make work pay sets out an ambitious agenda to ensure employment rights are fit for a modern economy, empower working people and ensure working people are better off.
“These initial, indicative assessments of the primary legislation represent the best estimate of likely impact at this stage. However, we intend to refine our analysis and conduct further assessment as the bill progresses — working with experts and businesses.”
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