The government has reneged on its manifesto promise to protect workers from unfair dismissal in a humiliating climbdown following concerns from business owners.
Labour had backed a raft of “basic rights” including parental leave, sick pay and protection from unfair dismissal under the umbrella Employment Rights Bill.
The bid to tackle exploitative practices had been championed by former deputy prime minister Angela Rayner as a law that was “good for workers and good for business”.
But the government has now been forced to backtrack after concerns about the impact it could have on small businesses saw it struggle to progress through parliament.
Ministers previously rejected the Lords’ suggestion to change the qualifying period to six months, with business minister Kate Dearden saying it was “committed to delivering unfair dismissal protections from day one”.
But on Thursday the government conceded to a six-month qualifier, saying it had made a “workable package” that would be more likely to get approved by MPs. Currently, the qualifying period is 24 months.
The latest U-turn came as Keir Starmer scrambled to refute allegations that Labour had misled the public, after pledging not to raise taxes on working people before overseeing a record £26bn tax hike during the autumn budget on Wednesday.
Sir Keir insisted Labour had “kept our manifesto”, which promised not to raise income tax, national insurance or VAT on working people.
Helen Miller, director of the respected Institute for Fiscal Studies (IFS) think tank, accused Labour of breaching the pledge, saying that, as a result of income tax threshold freezes and other measures, national insurance “will increase”. “I would call that a breach of the manifesto,” she said.
Already facing allegations of failing to protect working people with the budget, Labour bunkered down for more criticism over the workers’ rights bill on Thursday, insisting the package would still benefit working people and support businesses.
The Department for Business and Trade (DBT) said: “The government convened a series of constructive conversations between trade unions and business representatives.
“On the basis of the outcome of these discussions, the government will now move forward on the issue of unfair dismissal protections in the Employment Rights Bill to ensure it can reach royal assent and keep to the government’s published delivery timeline.”
It went on: “The discussions concluded that reducing the qualifying period for unfair dismissal from 24 months to six months (whilst maintaining existing day-one protection against discrimination and automatically unfair grounds for dismissal) is a workable package.”
The government insisted the amended package would “benefit millions of working people who will gain new rights and offer business and employers much-needed clarity”.
“To further strengthen these protections, the government has committed to ensuring that the unfair dismissal qualifying period can only be varied by primary legislation and that the compensation cap will be lifted,” the DBT said.
The change is also backed by union chiefs, who said the “absolute priority” is to get benefits like day one sick pay onto the statute book. One source told The Independent that unions affiliated with Labour had been in talks with the government and employers’ representatives over the last few days.
They noted that there had been “ping pong” between the Lords and Commons on the issue of employment rights and had come to “a fair compromise”.
Only unfair dismissal was discussed within the rights, they added, but noted that a nine-month probation qualifying period had now been removed which “could have hung over employees”. The talks also saw the removal of the compensation cap for unfair dismissal imposed by the previous Tory government.
The source said: “This has broken the deadlock and crucially it means that 8 million people will have day one sick leave rights from April next year.”
TUC General Secretary Paul Nowak said: “The Employment Rights Bill is essential to better quality, more secure jobs for millions of workers across the economy.
“The absolute priority now is to get these rights – like day one sick pay – on the statute book so that working people can start benefitting from them from next April.
“Following the government’s announcement, it is now vital that peers respect Labour’s manifesto mandate and that this Bill secures Royal Assent as quickly as possible.”
Former deputy prime minister Angela Rayner had only recently made an impassioned defence of day one protection from unfair dismissal, saying it was the government’s duty to deliver its proposed reforms.
“Day one protection from unfair dismissal will not remove the right of businesses to dismiss people who cannot do their job or pass a probation, but it will tackle cases of unfair dismissal, where hard-working employees are sacked without a good reason,” she said earlier this month.
“A six-month qualifying period threshold still leaves employees exposed to dismissal without good reason in the early months of a new job.”
At the time, she took aim at “the party opposite”, assuring on her side of the House “we believe workers deserve fairness, dignity and respect at work, and they deserve it from day one on the job”.
