IoD research finds employment law reforms will damage UK economic growth
New research from the Institute of Directors reveals that over seven in 10 (72%) business leaders believe that the Employment Rights Bill will have a negative impact on UK economic growth.
The research also investigated how business leaders plan to respond to the measures in the Bill. Half (49%) reported that they will be less likely to hire new staff, a third (36%) stated that they will be more likely to outsource roles or operations to other countries, and a quarter (23%) reported that they will be more likely to make redundancies. Slightly over half (52%) of directors also reported that they will be more likely to invest in automation.
Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said:
“The Employment Rights Bill, in conjunction with the recent increase in employer National Insurance Contributions and above-inflation increases to the National Living Wage, is significantly damaging business hiring intentions and confidence in the UK economy.
“This research clearly shows that the Bill will undermine the government’s key aims of securing the highest sustained growth in the G7 and achieving an 80% employment rate.
“Government has yet to show that it is listening to the concerns of business about the potential unintended consequences of the Bill as it is currently drafted. As the Bill continues its passage through the House of Lords, we are calling for targeted changes to the Bill to restore business confidence in hiring and investment in staff in the UK.
“If there is a silver lining, it is that more employers will invest in automation and other measures which may improve the UK’s stagnating productivity levels.”
The Institute of Directors has set out a number of key changes to the Employment Rights Bill that would significantly soften the negative impact of the reforms.
Full results
483 responses from across the UK, conducted between 15-28 May 2025. 14% ran large businesses (250+ people), 19% medium (50-249), 24% small (10-49 people), 31% micro (2-9 people) and 12% sole trader and self-employed business entities (0-1 people).
What impact, if any, do you believe the Employment Rights Bill would have on UK economic growth?
What impact, if any, would these reforms have on your organisation’s approach to the following:
