Labor U-turn on plan to protect workers against unfair dismissal on day one

Ministers have abandoned plans to give workers protection against unfair dismissal on day one in an effort to ensure employment rights The bill makes it through Parliament.

The government now intends to introduce the right after six months’ service – down from the current qualifying period of 24 months – in a U-turn that violates Labour’s manifesto.

The legislation has been stuck in a standoff between peers and MPs over a core proposal to give workers protection on their first day on the job, as well as measures to ban “exploitative” zero-hours contracts.

The Department of Business and Trade (DBT) stressed that the updated package will still benefit “millions of working people who will gain new rights and provide much-needed clarity to businesses and employers”.

But there’s a danger of getting angry by climbing up Labor MPs lashed out on Thursday night, just a day after Rachel Reeves’ budget silenced backbench dissent, some of whom were quick to express disappointment.

business secretary peter kyle Insisted that agreement was found by “unions and employers” and “it’s not my job to stand in the way of agreement”.

“They have gone through a difficult process of working together to find a compromise…it is my job to accept that,” he told broadcasters on Thursday.

DBT said other entitlements to parental leave and sick pay will still continue, coming into effect in April 2026.

Labour’s manifesto explicitly promises that “there will be full consultation with businesses, workers and civil society on how to put our plans into practice before the legislation is passed”.

“This will include banning exploitative zero-hours contracts, stopping firing and rehiring, and providing basic rights such as parental leave, sick pay and protection from unfair dismissal from day one,” it says.

There was a mixed union reaction to the U-turn, which follows concerns expressed by some businesses about potential costs and recruitment challenges.

Unite boss Sharon Graham said the bill had become “a shell of its former self”, while TUC general secretary Paul Novak said the “absolute priority” was to get the legislation onto the statute books.

“Following the government’s announcement, it is now vital that colleagues respect Labour’s manifesto and that the bill receives royal assent as soon as possible,” Mr Novak said.

Ms Graham said: “These continued disputes will only harm workers’ confidence that the promised protections will be worth the wait. Labor needs to deliver on its promises.”

Business groups welcomed Thursday’s concession, saying the six-month qualifying period was “crucial for worker safety as well as the confidence of businesses to hire and support employment”.

However, he warned that companies would “still have concerns” about a number of powers within the bill, including limits on industrial action, guaranteed hours contracts and seasonal and temporary workers.

Six industry groups involved in discussions with trade unions said, “We are committed to working with the government and unions to deal with this in the secondary legislation needed to implement the bill.”

tory leader Kemi Badenoch described the move as “another humiliating U-turn” for Labor and said the legislation still “contains measures that will hurt businesses and be terrible for economic growth”.

He said, “If Labor won’t eliminate the worst elements of this terrible bill, we will. Britain cannot build prosperity with more and more bureaucracy.”

Alex Hall-Chen, chief policy adviser for employment at the Institute of Directors, said: “This is great news for businesses.

“The Government’s decision will give employers confidence that they can correct recruitment mistakes without risking lengthy and expensive tribunal cases.”

But Andy MacDonald, Labor MP for Middlesbrough and Thornaby East, branded the move a “complete betrayal” and vowed to push for it to be reversed.

“When Keir Starmer asked me to work with our trade unions to develop a program for the biggest lift to workers’ rights and protections in a generation, I did exactly what I was asked and we got the New Deal to work People,” He said.

“The plan announced today to reduce the qualifying period for unfair dismissal from two years to six months is a complete betrayal.”

“We cannot support that half-measures”, he said, adding: “This is a wrong move and I will campaign to reverse this concession.”

Poole’s Labor MP Neil Duncan-Jordan told the Press Association: “There have been no discussions with the PLP about this.

“The Lords do not have primacy over manifesto commitments, so why have we capitulated?”

Rachel Maskell, Labor MP for York Central, told PA: “Employers have nothing to fear from day one rights, but workers need to fear an employer who doesn’t want day one rights.”

Another Labor MP told PA that the collapse showed that Sir Keir and Ms Reeves were “weak” and had succumbed to external pressure, adding: “The point is this is Labour’s budget for working people, and then one of your key programmes, you eliminate a significant part of it.

“This is a violation of the manifesto.”