Ministers Reject Workers' Rights Dilution Despite Growth Concerns

Business Secretary Jonathan Reynolds has rejected calls to weaken employment reforms, even though the Budget watchdog warned the legislation will harm growth.

NationPulse Desk

Oct 30, 2026 · 3:43 PM 2 min read

Key takeaways

Business Secretary Jonathan Reynolds refused to water down workers' rights reforms despite growth fears.

The OBR warned that Labour's Employment Rights Act will have a negative impact on growth.

Government analysis indicates the reforms could cost businesses up to £5 billion a year.

Mr Reynolds announced a £2.5 billion deal to build jet engines during a visit to a Rolls-Royce factory in Derby on Thursday.

The British Chambers of Commerce criticized the rollout of the legislation for lacking employer guidance.

Business Secretary Jonathan Reynolds has rejected calls to weaken workers' rights reforms, despite anxieties that the measures are hurting economic growth. Speaking on Thursday during a visit to a Rolls-Royce factory in Derby for a new £2.5 billion jet engine deal, he maintained that the government has struck the correct balance between the demands of trade unions and businesses.

His remarks follow a warning from the Budget watchdog that Labour's Employment Rights Act will create a negative impact on growth. The legislative changes involve enhanced protections against unfair dismissal, prohibiting exploitative zero-hours contracts, and providing a right to request flexible working.

Mr Reynolds told The Sun that the package was developed alongside both unions and companies to establish proper equilibrium. He stated that the Office for Budget Responsibility cannot evaluate the distributional impact of growth, noting that past economic expansion driven by specific sectors or large-scale immigration left many people without tangible benefits.

Highlighting changes to zero-hours contracts, which provide workers with the right to agreements reflecting their regular hours, he added that there is no extra cost involved. The British Chambers of Commerce expressed concern that parts of the legislation are launching before employers receive guidance, with Patrick Milnes calling the rollout a very disappointing approach that needs phasing in.

The OBR stated that higher labor-related costs from the Employment Rights Act will exceed any positive effects, while government analysis indicates the reforms could cost businesses up to £5 billion annually. Meanwhile, Mr Reynolds celebrated the £2.5 billion agreement at Rolls-Royce to construct jet engines, which ministers hope will generate tens of thousands of jobs and help power future passenger and military aircraft.

Mr Reynolds called the agreement the biggest industrial opportunity for the UK, ensuring the country wins the race to power next-generation passenger planes while keeping manufacturing local. Rolls-Royce CEO Tufan Erginbilgic described the agreement as a landmark moment for the British aerospace sector.

Questions and answers

What reforms are included in the Employment Rights Act?

The reforms include stronger protections against unfair dismissal, a ban on exploitative zero-hours contracts, and a right to request flexible working.