The government has ditched its election manifesto commitment to provide all workers with the right to claim unfair dismissal from their first day in a job.
The rule, as part of the Employment Rights Bill, will now apply after six months.
The change follows complaints from businesses that the original plan would put firms off from hiring. It has also faced opposition in the House of Lords.
New day-one rights for sick pay and paternity leave will still go ahead from April 2026.
Business groups, trade unions and minister held discussions this week.
In a joint statement, British Chambers of Commerce, Chartered Institute of Personnel and Development, Confederation of British Industry,Federation of Small Businesses, Recruitment and Employment Confederation and Small Business Britain said “businesses will be relieved” at the unfair dismissal change, adding that the agreement to keep “a qualifying period that is simple, meaningful, and understood within existing legislation..is crucial for businesses confidence to hire and to support employment, at the same time as protecting workers”.
But the statement continued that “businesses will still have concerns about many of the powers contained in this Bill” including on guaranteed hours contracts, seasonal and temporary workers and thresholds for industrial action.
The day-one right to unfair dismissal was a key commitment in Labour’s general election manifesto and dropping it will add pressure on the government following criticism that it also dropped its pledge to not raise taxes after extending the freeze on income tax thresholds in the Budget.
Business secretary Peter Kyle, who at the Labour Conference in September said the Employment Rights Bill would be implemented “in full, defended the change, saying “compromise is strength”. Education secretary Bridget Phillipson told Sky News: “Sometimes you do have to adopt some pragmatism if you want to make sure that you get the wider package through.”
Conservative Party leader Kemi Badenoch said the move is “another humiliating U-turn” for Labour and said the legislation still contains “measures that will damage businesses and be terrible for economic growth”.
Some Labour MPs are unhappy too. In an article for Labour List, Andy McDonald MP said:
“This is not day one rights. It is a half-way measure, and it falls far short of what was promised to workers in Labour’s manifesto.
“This climb-down is particularly troubling given the government’s overwhelming majority in the House of Commons. When a reform is supported by the elected chamber, when it appeared explicitly in the manifesto on which that majority rests, and when every relevant Cabinet minister has publicly endorsed it, there is no justification for allowing the unelected House of Lords to dilute or dictate its content.
“The authority of the Commons must be respected, and a confident government should be prepared to assert that authority.”