Methodology note
Give day-one unfair-dismissal rights: calculation note
Scenario estimate showing gross costs, offsets and behavioural uncertainty; not an official costing.
Central fiscal result
+GBP 0.9bn - Net public-finance impact in 2027-28
Low case: +GBP 0.2bn. High case: +GBP 4.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.
Scenario and baseline
- Extend ordinary unfair-dismissal protection from six months to day one, with probation rules.
- Baseline is current law and published official data unless stated.
- Private business costs are excluded unless they affect tax or procurement.
- Target year is 2027-28, with later years shown separately.
Affected population
- Unit is employees with short tenure.
- ERA analysis cites 6.3m employees gaining protection.
- Model is beyond the six-month ERA baseline.
- Small firms and probation hires are most exposed.
Gross impact
- ERA analysis says unfair-dismissal reform protects 6.3m employees.
- Official day-one unfair-dismissal EANDCB is GBP 0.042bn.
- True day-one extension adds behavioural and public HR costs.
- Central tribunal/enforcement pressure is GBP 0.35bn.
Fiscal build-up, central case
- Public-sector HR and legal costs: +GBP 0.25bn
- Tribunal and Acas capacity: +GBP 0.35bn
- Employment and welfare risk: +GBP 0.35bn
- Tax and NI offsets: -GBP 0.10bn
- Business-cost fiscal spillover: +GBP 0.05bn
Central net impact: +GBP 0.9bn in 2027-28.
Behaviour and pass-through
- Low case assumes clear probation rules.
- Central assumes more claims and cautious hiring.
- High case assumes weak probation exceptions.
- Employers may screen harder before hiring.
- No retention saving is scored.
Phasing
- 2026-27: +GBP 0.3bn. Guidance and tribunals.
- 2027-28: +GBP 0.9bn. Rights take effect.
- 2028-29: +GBP 1.0bn. Claims develop.
- 2029-30: +GBP 1.1bn. Case law settles.
Main source groups
- S1: S1 ERA analysis: 6.3m employees affected by unfair-dismissal reform.
- S2: S2 ERA Table A10: unfair-dismissal cost about GBP 42m EANDCB.
- S3: S3 Tribunal stats: 58,000 open single cases.
- S4: S4 Autor/Kerr/Kugler: protection costs can reduce productivity.
- S5: S5 HMT/ONS labour-market data: hiring is already soft.