OBR warning | Employment Rights Bill likely to have 'net negative' impact on economy

The Government's push for stronger workers’ rights will likely have a “net negative” impact on the economy, the Office for Budget Responsibility has warned.

The Employments Rights Bill - a package of huge reforms to employment laws that will give more power to workers - is one of Labour’s flagship plans for their first term in Government since 2010.

It includes measures such as a right to request flexible working from day one of employment, sick pay from the first day of illness, changes to probation periods and earlier entitlements to maternity pay.

The bill is currently going through stages of Parliament before consultations with employers, with an expected implementation in 2026.

But according to the OBR's economic and fiscal outlook for March 2025, the economy will take a hit as a result.

In its Economic & Fiscal Outlook for March 2025, the OBR wrote: "Employment regulation policies that affect the flexibility of businesses and labour markets or the quantity and quality of work will likely have material, and probably net negative, economic impacts on employment, prices, and productivity.