Green - Labour market
Give day-one unfair-dismissal rights
Extend ordinary unfair-dismissal protection from six months to day one, with probation rules.
Last updated: May 2026.
Legal baseline
The central case models true day-one rights beyond the ERA six-month qualifying-period compromise.
- ERA analysis protects 6.3m employees.
- Official day-one cost was about GBP 42m.
- True day-one rights are wider.
Core trade-offs
Workers gain job security. Employers face higher expected dismissal costs. Marginal hiring, probation jobs and small-firm trial roles are likely to fall.
- Workers gain legal security.
- Employers face dismissal risk.
- Marginal hiring likely falls.
Illustrative fiscal impact
+GBP 0.2bn to +GBP 4.0bn. Central estimate: +GBP 0.9bn.
- Positive numbers mean public-finance pressure; negative numbers mean Exchequer savings.
- Gross costs are separated from tax, NI and benefit offsets.
- Private business costs are not automatically fiscal costs.
- Behavioural responses widen the range materially.
- This is not an official costing.
Economic impact by 2027-28
- Jobs: Likely negative for marginal hiring and trial jobs, especially in small firms.
- Wages: Raises security rather than hourly pay; may lower wage flexibility.
- Prices: Small direct effect; costs may pass through in labour-intensive sectors.
- GDP / productivity: Likely negative at the margin if poor job matches persist longer.
Assessment
Day-one protection can reduce arbitrary dismissal, but it also raises the expected cost of taking a chance on a new hire. The cost is not just tribunal fees; it is changed hiring behaviour.
Confidence: Low. Official costs cover narrower policy; behavioural hiring effects are unobserved.
Main risks
- Hiring risk: Employers may avoid marginal candidates or rely more on contractors.
- Tribunal pressure: Extra claims would land on an already stretched system.
- Probation disputes: Rules around fair probation dismissal may become heavily litigated.
Safeguards
- Keep a clear probation route.
- Fund Acas and tribunals first.
- Monitor hiring among young workers.
Academic evidence
Autor, Kerr and Kugler, Economic Journal, 2007
Does Employment Protection Reduce Productivity?
Employment-protection changes can reduce productivity where firms face higher firing and adjustment costs.
Supports caution on policies that raise dismissal, scheduling or adjustment costs.
DiNardo, Fortin and Lemieux, Econometrica, 1996
Labor Market Institutions and the Distribution of Wages, 1973-1992
Labour-market institutions can compress wage inequality through wage floors and bargaining power.
Useful for distributional channels, not for claiming free fiscal gains.
Labor Market Institutions and the Distribution of Wages, 1973-1992 (1996)
UK government evidence
Department for Business and Trade, 2026
Employment Rights Act 2025 - Economic Analysis
The ERA economic analysis estimates around GBP 1bn annual direct business cost before social-care bargaining.
Provides official baseline costs and affected groups.
Department for Business and Trade, 2026
Employment Rights Act 2025 impact assessments
The IA collection separates guaranteed hours, unfair dismissal, fire and rehire, union and equality measures.
Prevents treating broad rights packages as one undifferentiated pledge.
Ministry of Justice, 2026
Tribunal Statistics Quarterly: October to December 2025
Employment Tribunals received 13,000 single claims and had 58,000 open single cases in Q3 2025.
Shows enforcement capacity is already a binding risk.
Tribunal Statistics Quarterly: October to December 2025 (2026)
Sources
- PolicyLens illustrative scenario methodology for give day-one unfair-dismissal rights Internal - PolicyLens, 2026
- Employment Rights Act 2025 - Economic Analysis UK government report - Department for Business and Trade, 2026
- Employment Rights Act 2025 impact assessments Impact assessment collection - Department for Business and Trade, 2026
- Tribunal Statistics Quarterly: October to December 2025 Official statistics - Ministry of Justice, 2026
- Does Employment Protection Reduce Productivity? Academic article - Autor, Kerr and Kugler, Economic Journal, 2007
- UK labour market statistics Parliamentary statistics - House of Commons Library, 2026
- Labor Market Institutions and the Distribution of Wages, 1973-1992 Academic article - DiNardo, Fortin and Lemieux, Econometrica, 1996
- Workers' Charter 2026 Party policy source - Green Party of England and Wales, 2026
Other Green policies
PolicyLens estimates are illustrative and not official costings.