The government has U-turned on its promise to protect workers from unfair dismissal from day one in a job.
In a watering down of one of the key measures in the Employment Rights Bill, the qualifying period for unfair dismissal will now be six months – down from 24 months currently.
Labour wanted to bring in protections from day one in the job but faced opposition from some businesses.
There will also be no statutory probation period and workers will still get sick pay from day one in the job and paternity leave from April next year.
Ministers said reducing the qualifying period for unfair dismissal was a “workable package” that will “benefit millions of working people who will gain new rights and offer business and employers much needed clarity”.
There was a mixed reaction from unions and thinktanks, with the TUC urging the Lords to allow the rest of the legislation to pass.
Paul Nowak, the TUC general secretary, said: “The Employment Rights Bill is essential to better quality, more secure jobs for millions of workers across the economy.
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“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.”
The Employment Rights Bill was a cornerstone of Labour 2024 election manifesto and also contains measures that would ban zero hours contracts.
The legislation has been caught in parliamentary ping pong with the House of Lords.
Last month some peers objected to the provisions around unfair dismissal, suggesting that offering workers that right from day one in the job would deter businesses from hiring.
They also opposed Labour’s move to force employers to offer guaranteed hours to employees from day one, arguing that not all workers objected to having zero hours.
The Resolution Foundation said the change in the unfair dismissal period was a “sensible move that will speed up the delivery of improvements to working conditions and reduce the risk of firms being put off hiring”.
It said the change “strikes the right balance between strengthening worker protections and encouraging businesses to hire.”
Nye Cominetti, principal economist at the Resolution Foundation, said: “The Employment Rights Bill contains a welcome package of measures to improve conditions for those most likely to suffer from insecurity at work.
“But the reforms have risked being derailed by the new ‘day one’ right to protection against unfair dismissal. The UK currently has one of the longest qualifying periods for protection which needs to come down. But scrapping it entirely would have meant lurching from one extreme to the other and putting firms off hiring new workers.
“This sensible move to a six month qualifying period will bring the UK into line with other countries, deliver tangible improvements to working conditions, and help the Government move forward with other key aspects of the Employment Rights Bill.”
But Andrew Griffith, the shadow business and trade secretary, said: “Rachel Reeves’ benefits street budget contained little good news for businesses already struggling under the weight of last year’s jobs tax.
“Inflation and unemployment are set to be higher for longer, wage costs are going up and business rate reliefs are being cut.
“It’s hard to see anything in this budget which will boost confidence or stop the exodus of young people and wealth creators leaving.
“Only the Conservatives will give businesses the environment to grow, including by scrapping business rates for thousands of high street firms and reversing Labour’s damaging family business tax.”
