Labour makes huge U-turn to ditch Rayner’s pledge in second manifesto breach in just days
The Government has abandoned one of its manifesto promises after employers pleaded with Ministers not to destroy jobs
Angela Ratyner championed the new laws but was forced to resign (Image: Getty)
Labour has scrapped a key part of Angela Rayner’s employment laws in a massive climbdown, after business warned it would destroy jobs. Plans to give workers rights from their first day in a new job have been axed, even though they were promised in Labour’s general election manifesto. The u-turn was confirmed by Department for Business and Trade.
The Employment Rights Bill, championed by Ms Rayner before she resigned as Deputy Prime Minister, would have given staff protection from unfair dismissal from day one. But business groups warned it would push up the cost of employing staff, which has already risen due to National Insurance increases and above-inflation rises in the minimum wage, and make it harder to take a risk on new workers. Ministers are now to accept changes to the Bill so that protection against unfair dismissal comes into force after six months instead.
The Government argues the u-turn will prevent the employment legislation being delayed in the House of Lords. At the moment, it takes two years before employees are protected.
Other new day-one rights to sick pay and paternity leave will still go ahead, and come in to force in April 2026.
Jubliant business leaders welcomed the change. In a joint statement, employers said: “Businesses will be relieved that the Government has agreed to a key amendment to the Employment Rights Bill which can pave the way to its initial acceptance.
“We welcomed this chance to hold meaningful dialogue and believe the constructive nature of our discussions can be a template to resolve outstanding issues. Businesses have always been clear that making the Employment Rights Bill work would take business, trade unions and government working together to find a landing zone for these major policy changes.
“This agreement keeps a qualifying period that is simple, meaningful, and understood within existing legislation. It is crucial for businesses confidence to hire and to support employment, at the same time as protecting workers.”
But they warned: “Businesses will still have concerns about many of the powers contained in this Bill. This includes guaranteed hours contracts, seasonal and temporary workers and thresholds for industrial action.”
The statement was published by British Chambers of Commerce, the Chartered Institute of Personnel and Development, the Confederation of British Industry, the Federation of Small Businesses, the Recruitment and Employment Confederation and Small Business Britain.
Kemi Badenoch, Leader of the Conservative Party, said: “On Monday, I told a conference of Britain’s biggest businesses that Labour’s day one employment rights policy would destroy jobs and drag our country backwards. Four days later, and in the aftermath of their disastrous budget, Starmer and Reeves have finally woken up to just how bad these policies actually are.
“This is yet another humiliating u-turn. Labour talk about stability but govern in chaos. No company can plan, invest or hire with this level of uncertainty hanging over them.
“But the Employment Rights Bill still contains measures that will damage businesses and be terrible for economic growth, and the Conservatives will fight every single one. If Labour won’t scrap the worst elements of this awful Bill, we will. Britain cannot build prosperity with more and more bureaucracy.”Earlier this week, Business Secretary Peter Kyle hinted concessions were coming. He said on Monday there would be extensive consultations about measures in the Employment Rights Bill, insisting it was not a “zero sum” game where either workers or bosses lost out.
Confederation of British Industry (CBI) boss Rain Newton-Smith, speaking before the u-turn, warned the legislation would take the country “backwards” in its current form.
She called on the Government to change course on the legislation, saying: “Lasting reform takes partnership – not a closed door.”
She told the PA news agency: “If the burden of regulation means that when businesses are trying to implement it, it’s unworkable, then it’s not a lasting solution.”
