Labour ditches day-one protection from unfair dismissal in U-turn

The government has U-turned on its manifesto commitment to offer workers the right to claim unfair dismissal from their first day in a job.

Ministers now plan to introduce the right after six months instead, after business groups voiced concerns it would discourage firms from hiring.

The government argued it was making the climbdown to stop its employment legislation being delayed in the House of Lords, where it has run into opposition.

Other new day-one rights to sick pay and paternity leave will still go ahead, coming into effect in April 2026.

A source said most unions backed the changes, though Unite said the U-turn would "damage workers' confidence".

Business groups welcomed the announcement, which followed talks between major industry bodies and unions.

The six business groups involved in the discussions said in a statement that companies would be "relieved" - but added that firms still had "concerns about many of the powers" contained in the government's employment package.

Currently, employers face additional legal hurdles if they want to sack employees who have been in their role continuously for two years or more.

They must identify a fair reason for dismissal - such as conduct or capability - and show that they acted reasonably and followed a fair process.

Labour had planned to abolish this qualifying period completely, alongside introducing a new legal probation period, likely to have been nine months.

The promise was a central pledge in Labour's manifesto ahead of last year's general election, and a key plank of its Employment Rights Bill which applies to England, Scotland and Wales, but not Northern Ireland where employment law is devolved.

Labour pledged to create "basic rights from day one to parental leave, sick pay, and protection from unfair dismissal".

But asked if it was a breach of the Labour manifesto, Business Secretary Peter Kyle said: "No."

Instead, he argued the manifesto had pledged to "bring people together" and "that this would not be legislation that pits one side against another".

Kyle told broadcasters that the compromise had been found by "unions and the employers" and it was "not my job to stand in the way of that compromise".

The government now plans to implement unfair dismissal protection after six months instead of day one, and ditch the new legal probation period.

In recent weeks, the House of Lords has twice voted in favour of a six-month period, slowing the legislation's passage through Parliament.

The Fair Work Agency - a new body tasked with overseeing the new rights - will also be set up in 2026, the government announced.

There had been fears that day-one rights could overwhelm an employment tribunals system already facing huge backlogs.

One union source told the BBC that the "vast majority of unions" present at discussions were comfortable with introducing unfair dismissal only after six months.

The Trades Union Congress (TUC) said 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".

TUC General Secretary Paul Nowak called on the Lords to "respect Labour's manifesto mandate" and ensure the legislation was passed as soon as possible.

Kate Nicholls, chair of UK Hospitality, said: "This is a pragmatic change that addresses one of hospitality businesses' key concerns."

The six-month waiting period would "give businesses much-needed breathing room and avoid further damage to employment opportunities", she added.

And the national chair of the Federation of Small Businesses (FSB) said firms had been "extremely worried" about day-one protection from unfair dismissal.

Martin McTague said bosses did not have an issue with most of Labour's workers' rights package, but that the compromise on unfair dismissal was "by far and away the most important thing".

He told the BBC: "I can't emphasise too much that this part of the bill was the most important thing to put right."

Mr McTague said fears over the change had led to a stall in recruitment, welcoming the climbdown on day-one rights as "a pragmatic change".

But Labour MP Andy McDonald branded the move a "complete betrayal" and vowed to push for its reversal.

Another Labour backbencher, Bell Ribeiro-Addy, said she was "very disappointed" that the party was rolling back on a fundamental manifesto pledge, something that will "worry a lot of people".

She told BBC Newsnight that the move showed "we're beholden to what businesses seem to want when this was meant to be a bill for working people".

Unite the Union - a major Labour donor through the affiliation fees its members pay to the party - also hit out at the U-turn, calling the employment bill a "shell of its former self".

Unite general secretary Sharon Graham said: "These constant row-backs will only damage workers' confidence that the protections promised will be worth the wait. Labour needs to keep its promises."

The Conservatives called the U-turn "humiliating" but said the legislation was "still not fit for purpose".

"Keir Starmer must grow a backbone, stand up to his union paymasters and ditch every single job-destroying anti-growth measure in the employment rights bill now," shadow business secretary Andrew Griffith said.

Clarification 16 December: This article was amended to make clear the Employment Rights Bill applies to England, Scotland and Wales but not Northern Ireland which has its own legislation.

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