Labor abandons first day protection against unfair dismissal in U-turn

The government has done a U-turn on its stated commitment to offer all workers the right to claim unfair dismissal from their first day of work.

Ministers now plan to introduce the duty after six months, after business groups raised concerns it would deter businesses from hiring.

The government argued it was taking steps to prevent its labor legislation from being delayed in the House of Lords, where it ran into opposition.

Other new rights from day one to sick pay and paternity leave will remain in place and come into effect in April 2026.

A source said most unions backed the changes, although Unite said the U-turn would “damage workers’ confidence”.

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

In a statement, the six business groups involved in the discussions said businesses would be “relieved” but added that businesses still had “concerns about many of the powers” contained in the government’s jobs package.

Currently, employers face additional legal obstacles if they want to fire employees who have been in their position continuously for two years.

They must identify a fair reason for dismissal (such as conduct or capacity) and demonstrate that they acted reasonably and followed a fair process.

The Labor Party had planned to abolish this qualifying period entirely, along with a new statutory probationary period, probably nine months.

The promise was a central promise in Labour’s manifesto ahead of last year’s general election, and a key point of its Working Rights Bill.

Labor pledged to create “basic rights from day one to parental leave, sick pay and protection against unfair dismissal”.

But when asked if this was a breach of Labour’s manifesto, Business Secretary Peter Kyle said: “No.”

Instead, he argued that the manifesto had committed to “bringing people together” and “that this would not be legislation that pits one side against the other.”

Speaking to broadcasters, Kyle said the compromise had been reached by “the unions and the employers” and that “it was not my job to stand in the way of that compromise.”

The government now plans to implement protection against unfair dismissal after six months instead of the first day, and scrap the new statutory trial period.

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

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

There were fears from day one that the rights could overwhelm an employment tribunal system already facing huge backlogs.

A union source told the BBC that the “vast majority of unions” present at the discussions were comfortable with introducing unfair dismissals only after six months.

The Trades Union Congress (TUC) welcomed the news, adding that “the absolute priority now is to get these rights – such as the first day of sickness – included in the statutes so that workers can start benefiting from them from next April.”

TUC general secretary Paul Nowak called on the House of Lords to “respect the mandate of Labour’s manifesto” and ensure the legislation is passed as soon as possible.

Kate Nicholls, chair of UK Hospitality, said: “This is a pragmatic change that addresses one of the key concerns for hospitality businesses.”

The six-month waiting period would “give businesses much-needed breathing room and prevent further damage to employment opportunities,” he added.

Labor MP Andy McDonald called the move a “complete betrayal” and vowed to press for it to be reversed.

“When Keir Starmer asked me to work with our unions to develop a program for the biggest improvement in workers’ rights and protections in a generation, I did exactly what I was asked and we produced the New Deal for Workers,” he said.

But Unite the Union, a major Labor donor through the membership fees its members pay to the party, criticized the U-turn, adding that the jobs bill was now a “shell of its former self”.

Unite general secretary Sharon Graham added: “These continued clashes will only damage workers’ confidence that the protections promised will be worth the wait. Workers must keep their promises.”

Conservatives called the U-turn “humiliating” but added that the legislation was “still not fit for purpose.”

“Keir Starmer must toughen up, stand up to his union paymasters and get rid of all the job-killing anti-growth measures in the Working Rights Bill now,” added shadow business secretary Andrew Griffith.