As the Employment Rights Bill enters the Committee Stage of its reading in Parliament, the Regulatory Policy Committee (RPC) has published its opinion on the impact assessments (IA) for the Employment Rights Bill. The RPC is an independent regulatory body which assesses the quality of evidence and analysis used to inform government regulatory proposals. IAs are an important part of the decision-making process and set out the objectives of policy proposals and the costs, benefits, and risks of achieving those objectives.
The RPC assessed eight of the twenty-three individual IAs as “not fit for purpose”, six of which fall within the ‘highest impact’ measure category. The RPC considered the evidence and analysis supporting the rationale for intervention to be insufficient and rated “red” for the following six IAs:
1) Day one unfair dismissal rights
2) Repeal of the Trade Union Act 2016
3) Repeal of Strikes (Minimum Services Levels) Act 2023
4) Establish a Fair Pay Agreement
5) Flexible Working
6) Employer liability for all workplace harassment of employees by third parties
In particular, there was insufficient evidence relating to the claimed imbalance of power between employers and workers in certain sectors, for example public services and transport, for Repeal of Strikes (Minimum Services Levels) Act 2023 and Repeal of the Trade Union Act 2016 IAs. Provisions for zero-hour contracts and fire and re-hire practices also received “red” ratings for the justification of the preferred way forward.
The RPC’s opinion is that the issues are mainly due to lack of evidence for the problem being addressed and insufficient discussion of rationales for intervention, for example market failure. The opinion also commented on how there was insufficient assessment of how the Employment Rights Bill would impact small and microbusinesses.
The RPC’s overall assessment for the IA is “not fit for purpose” and recommends that it would be proportionate to undertake labour market and broader macroeconomic analysis to further understand the impact on employment, wages, output and, importantly, the pass-through of employer costs to employees. The government has not yet responded to the RPC’s opinion and will still need to consider a series of consultations to inform which measures will be included in the final legislation.