A leading government body, The Regulatory Policy Committee (RPC), has found that the impact assessments (IAs) for the Employment Rights Bill are “not fit for purpose”.
As above, the Employment Rights Bill announced by the government in October this year has received a critical response from RPC in relation to its IAs. The IAs set out the objectives of policy proposals and the costs, benefits and risks of different ways of achieving those objectives. The Government initially published a summary IA and then followed this up with 23 separate entries, each covering a specific measure contained within the Bill.
The RPC has assessed eight of the 23 individual IAs as “not fit for purpose”, with six of these being in the “highest impact” category within the initial summary IA. The following proposals have been rated as “red” in several categories:
- Day 1 unfair dismissal rights
- Repeal of Trade Union Rights 2016
- Flexible working changes
- Harassment by third parties
- Repeal of Strikes (Minimum Service Levels) Act 2023
- Establishing a Fair Pay Agreement
The key areas that the RPC highlighted deficiencies were lack of macro-economic analysis, insufficient rationale for intervention and limited scope of analysis.
Lack of macro-economic analysis
A need for broader labour market and economic impact analysis was identified by the RPC. They considered this proportionate given the significant reach of the measures to change employee rights and industrial relations across the economy. In particular, the RPC were concerned with how employer costs could affect employees and overall economic dynamics. There was concern that the IAs did not allow for proper understanding of the potential impact of the pass through of employer costs onto employees.
Insufficient rationale for intervention
The RPC report also criticised the IAs for their lack of sufficient evidence to justify the proposed measures in the Bill. It was found that there was insufficient consideration of alternative options, and this prevented there being an adequate justification for the new measures being the preferred way forward.
Without this rationale, there could be no assessment on the potential disproportionate impact that the Bill may have on SMEs and in turn no proposals of how to mitigate this.
Limited scope of analysis
As discussed above, the RPC highlighted how the IAs did not provide suitable assessment of the impacts that the Bill may have on SMEs and micro-businesses. This allows for a limited understanding of the implications the Bill may have for these enterprises.
Impact of the RPC assessment
This report only emphasises the importance of the Government conducting robust assessments given how extensive the reach of the Bill is set to be. The RPC recommends stronger analysis to help provide a more comprehensive understanding of the effects the Bill will have on employment, wages and productivity.
Failing to make these improvements, the IAs fall short of providing the evidence that is needed to properly support the legislation or even assess its impacts with accuracy. Annex A of the RPC report provides detailed findings and includes specific issues with individual IAs. You can read it here.
The RPC’s red rating is sure to raise questions about whether the Bill is ready and what the Government’s approach is to the legislative process. There is a need for a more transparent assessment ensure the new Employment Rights Bill can meet its goals without any unintended consequences.
The Government has yet to respond. The Bill has now reached Committee Stage in the House of Commons.
