How these proposals are brought forward, consulted on and implemented will be crucial to ensuring that their impact is positive and that they don’t have negative unintended consequences for either workers or businesses.
To provide a benchmark against which to measure the impact of these changes, the CIPD has assessed the UK’s employment rights framework and key labour market outcomes against other OECD economies.
Our findings show that while the UK has a comparatively low level of employment protection, it performs relatively well on a range of labour market outcome measures.
Employment protection in the UK is relatively weak
The UK sits low in the league of nations in terms of strictness of employment protection on both individual and collective dismissals.
UK ranks low on employment protection indicators
Strictness of employment protection in 2019 (OECD index)
| EPI score by country |
All dismissals |
|
Collective dismissals |
|
Individual |
| Italy |
2.9 |
Italy |
3.2 |
Italy |
2.7 |
| France |
2.7 |
France |
3.3 |
France |
2.5 |
| Sweden |
2.5 |
Sweden |
2.7 |
Sweden |
2.5 |
| Spain |
2.4 |
Germany |
2.6 |
Spain |
2.4 |
| Poland |
2.4 |
Spain |
2.4 |
Poland |
2.4 |
| Germany |
2.3 |
Poland |
2.4 |
Germany |
2.2 |
| Japan |
2.1 |
UK |
2.3 |
Japan |
2.1 |
| UK |
1.9 |
Japan |
2.0 |
UK |
1.7 |
| Canada |
1.7 |
Canada |
1.9 |
Canada |
1.7 |
| US |
1.3 |
US |
1.3 |
US |
1.3 |
| OECD |
2.3 |
OECD |
2.4 |
OECD |
2.2 |
Note: Index on scale of 0 to 6, with 6 as most strict. Source: OECD Indicators of Employment Protection | OECD
UK has a low proportion of people in temporary employment
However, despite its low level of employment protection, the UK has an above average employment rate at 75% and relatively low unemployment at 4%, by OECD standards.* It also has a low proportion of people in temporary employment at 5%.
By contrast, 17% of workers in Spain are in temporary employment, 16% in France and 12% in Germany. In addition, the UK’s 26% of temporary workers who say they want a permanent job is just over half the EU average, with 49% of temporary workers in France wanting a permanent job 79% in Italy and 82% in Spain.
*Employment rate is share of population 15 to 64 in employment. UK national statistics are for 16 to 64 and differ slightly. Sources: Employment rate | OECD, Unemployment, April 2024 - OECD News Release, June 2024
UK has low percentage of temporary workers
Employment protection and restrictions on temporary work
| Temporary hires stats |
EPI temporary hires (2019) |
|
Temporary (% of employees) 2023 |
|
Involuntary (% of temp) 2020 |
| US |
0.3 |
US |
4 |
Germany |
12 (2019) |
| Canada |
0.4 |
UK |
5 |
UK |
26 |
| UK |
0.4 |
Germany |
12 |
Poland |
45 |
| Japan |
1.3 |
Canada |
12 |
France |
49 |
| Germany |
1.7 |
Sweden |
15 |
Sweden |
54 |
| Poland |
1.8 |
Japan |
15 |
Italy |
79 |
| Sweden |
1.5 |
Poland |
15 |
Spain |
82 |
| Spain |
2.5 |
France |
16 |
EU average |
51 |
| France |
2.6 |
Italy |
16 |
|
|
| Italy |
2.8 |
Spain |
17 |
|
|
| OECD |
1.8 |
OECD |
11 |
|
|
Notes: Involuntary temporary employment for Germany 2019, due to break in series. UK national data for May-July 2020. Eurostat data from 2021 onwards based on new set of questions and non-comparable with UK. Sources: OECD Indicators of Employment Protection, OECD Data Explorer: Employment by permanency of the job - incidence, Statistics Eurostat, EMP01 SA: Full-time, part-time and temporary workers (seasonally adjusted) - Office for National Statistics
The CIPD’s research shows that stricter employment regulation is generally associated with a higher level of temporary employment and a higher proportion of people in temporary work who want permanent jobs.
If one of the UK Government’s objectives is to prevent the creation of more insecure work, policy-makers need to understand if there are proposed changes to strengthen employment rights which could undermine this ambition.
Avoiding unintended consequences
A good example of where caution and potentially compromise is needed as revealed in our research is the proposal to remove the two-year unfair dismissal qualifying period as part of the plan to create day-one employment rights.
The government has suggested that probationary periods will still be enabled, but there is as yet no detail on how this would work in practice and whether there would need to be new statutory rules around their use.
Discussions with CIPD members suggest that if there is more risk or complexity around hiring new staff and the use of probationary periods, employers will be more likely to prioritise hiring ‘oven-ready’ staff with proven experience. This could disadvantage young workers and other groups such as ex-offenders and the long-term unemployed with few qualifications. Employers may also increase reliance on temporary workers and the ‘temp to perm’ route into employment. This risks worsening the UK’s relatively good performance on this indicator.
Moreover, it is not just the hiring process that day-one rights may affect. Some employers may tighten up the assessment conditions in probationary periods, reducing the slack for marginal performers who might otherwise be given the time and space to demonstrate they can do the job.
Consequently, there is a strong case for the government to consider reducing the unfair dismissal qualifying period to 12 or 6 months, for example, rather than completely removing it.
Positively, the government has pledged to work in partnership with employers and consult on its legislative proposals which suggests there is real appetite to listen and where necessary, refine proposals to ensure positive outcomes for both workers and business.
The government has set itself an ambitious agenda to improve labour market performance, work quality outcomes and productivity, which is supported by the CIPD. We look forward to working with the government, other professional and employer bodies and the trade unions to deliver on this.
The CIPD's research findings highlighted above are noted in our paper Regulation and the labour market 2024.
