Business leaders believe Employment Rights Act will harm growth

05 Jun 2026

Research carried out by the Institute of Directors (IoD) has indicated that 86% of business leaders believe that the Employment Rights Act will adversely affect UK growth.

The latest figure represents an increase when compared to research carried out in May 2025.

63% of business leaders are less likely to hire new staff, the research showed. 57% are less likely to invest in automation.

The IoD is calling on the government to exempt employers with fewer than 250 employees from trade union access provisions; reintroduce the Statutory Sick Pay rebate for SMEs; and adjust the implementation timeline to give employers more time to prepare for the most complex reforms.

Alex Hall-Chen, Principal Policy Adviser at the IoD, commented: 'Our research found that business leaders are already halting or scaling back plans to hire in the UK, outsourcing roles more aggressively and automating roles where possible in direct response to the reforms.

'These reforms make hiring staff riskier and more expensive for employers. Coming as they do against the backdrop of already low business confidence, last year's employer's National Insurance hike and above-inflation minimum wage increases, they are acting as a strong deterrent to hiring.'