Published by Global Banking & Finance Review®
Posted on February 16, 2026
2 min readLast updated: February 16, 2026
Add as preferred source on GoogleA CIPD survey reveals that UK labour reforms will lead one-third of employers to cut hiring, citing increased costs and workplace conflict.
LONDON, Feb 16 (Reuters) - More than one in three UK employers plan to cut their hiring of permanent staff due to costs introduced by the government's labour law reforms, a survey showed on Monday.
The Chartered Institute of Personnel and Development, a professional body for the human resources sector, said overall hiring intentions remained at their lowest level on record excluding the first year of the COVID pandemic, adding to the risks that an ongoing jobs market slowdown deepens.
The Labour Party government of Prime Minister Keir Starmer secured parliamentary approval for its Employment Rights Act in December. Original plans for protections against unfair dismissal for new workers were softened but new rules on sick pay, zero-hours contracts and union rights remained.
The CIPD said:
* Three in four employers expect the reform to increaseemployment costs and more than half said it would increaseworkplace conflict * The government's estimated headline cost of the reform of1 billion pounds ($1.4 billion) does not reflect the full burdenon employers including updating internal policies, communicatingwith staff, and training managers * "It's important that government acts to try and mitigatethese potential negative consequences, including throughmeaningful consultation and where necessary compromise on keymeasures still to be decided in secondary legislation," BenWillmott, CIPD head of public policy, said * The median basic pay award remained at 3% for the seventhconsecutive quarter, the survey showed * The CIPD survey of 2,082 employers was conducted betweenDecember 18 and January 16($1 = 0.7351 pounds)(Writing by William Schomberg; editing by Suban Abdulla)
The Employment Rights Act is legislation that outlines the rights of employees in the UK, including protections against unfair dismissal and regulations on sick pay and zero-hours contracts.
Employment costs include all expenses associated with hiring and maintaining employees, such as salaries, benefits, training, and compliance with labor laws.
The CIPD is a professional body for human resource management and people development in the UK, providing resources, research, and support for HR professionals.
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