UK businesses accelerate layoffs amid AI surge and legislative uncertainty
The number of proposed mass dismissal programmes in the UK has risen by five per cent in the last year, driven by the ongoing Employment Rights Bill and the increasing adoption of AI.
The number of proposed mass dismissal programmes rose to 3,715 in 2024/25, up from 3,546 in the previous year, according to data shared by law firm TWM Solicitors. In total, these programmes announced over the last year planned a total of 267,800 proposed dismissals.
The manufacturing sector saw a notable increase, with notified proposed dismissals rising by 12 per cent to reach 630 programmes in 2024/25.
Public administration, education, and health recorded the sharpest proportional increase, with notified proposed dismissals rising by 19 per cent, while the banking and finance sector experienced a slight rise.
One of the reasons for this increase is the ongoing contested workers’ rights Bill, which promises to make changing employment contracts more difficult and will result in redundancy programmes being harder to conduct.
Anthony Wilcox, partner at TWM Solicitors, explained: “Under the new legislation… some redundancy exercises are going to become more complex.”
“Apart from the additional management cost and time faced by employers, the cost of getting a programme of contract changes or redundancies wrong under the new law will be substantial, so it is logical for employers to move forward with envisaged contract changes or redundancy programmes,” he added.
The Employment Rights Bill, which was expected to pass this month, is currently stuck at the ping-pong stage between the House of Commons and the House of Lords.
The main issue causing delays is ‘day one’ rights, as the Lords are pushing back and seeking to decrease the current two-year threshold to six months, rather than the proposed ‘day one’ of employment.
AI’s role in workforce ‘slimming’
Additionally, the increasing use of AI is making employers more comfortable with the idea that a “slimmed down workforce will find a way of coping with their increased workload,” stated Wilcox.
“AI is accelerating workforce change at the margins.” In the past couple of weeks, Salesforce has announced that it has eliminated around 300 jobs amid its AI push, while Amazon is expected to lay off approximately 10 per cent of its workforce.
AI has resulted in employers increasingly conducting staff reductions in multiple, frequent waves rather than in larger, single exercises.
He pointed out: “We don’t yet see programmes where employers are removing teams and replacing them with AI, it’s more that some employers envisage the smaller team left after the redundancies will be making use of AI to cope.” He added,”That trend is unlikely to slow down.”