More than a third of UK employers plan to cut back on permanent hiring in response to the government’s new workers’ rights legislation, a survey by the Chartered Institute of Personnel and Development (CIPD) has found.
The poll, conducted among 2,000 businesses, revealed that 37 percent of employers intend to reduce recruitment of permanent staff once the Employment Rights Act comes into effect. Over half of respondents said they expect an increase in workplace disputes as a result of the reforms.
The legislation introduces expanded protections for workers, including day-one statutory sick pay, easier trade union recognition, and a shorter qualifying period for unfair dismissal claims. Government estimates suggest the reforms could cost businesses around £1 billion a year. CIPD officials warned, however, that the official analysis may underestimate the true impact, particularly the additional administrative work required by HR departments.
Ben Willmott, head of public policy at the CIPD, said the changes risked adding pressure to employers already facing rising costs. “There is a real risk that these measures will act as a further brake on recruitment,” he said, urging ministers to engage with businesses and consider compromises where appropriate.
The survey also highlighted concerns about increased workplace conflict. Fifty-five percent of employers predicted more disputes under the new rules. Key points of contention include the reduction in the unfair dismissal qualifying period from two years to six months, new protections for zero-hours workers, and expanded powers for trade unions to access workplaces for recruitment and organising.
James Cockett, senior labour market economist at the CIPD, said the findings contrasted sharply with government expectations. Whitehall had predicted that greater union engagement would reduce conflict, yet only 4 percent of employers believed disputes would decline. The CIPD noted that most UK businesses, particularly the 1.4 million micro and small employers that do not formally recognise unions, may struggle to adjust to the expanded rights.
The Trades Union Congress welcomed the reforms, describing them as the most significant upgrade to workers’ rights in a generation and arguing they will improve dignity and wellbeing at work. Business groups, including the Confederation of British Industry and the British Chambers of Commerce, have voiced concerns about guaranteed hours contracts, seasonal work, and industrial action thresholds.
The CIPD warned that some elements of the law could have unintended consequences. Employers may turn to temporary or contract labour rather than permanent hires, potentially increasing job insecurity, while balancing compliance costs against broader economic uncertainty.
The survey underscores the challenge facing the government as it seeks to strengthen worker protections while sustaining employment growth. Employers, unions, and policymakers now face the task of navigating reforms that aim to improve workplace rights without curbing job creation.
