Labour Softens Day One Unfair Dismissal Plan to 12 Months After CBI Led Business Backlash ‘Phased Implementation’ Now Likely

Labour has abandoned a headline manifesto pledge to give every worker protection from unfair dismissal on their first day in a job, shifting to a six-month qualifying period after sustained pressure from business groups and growing resistance in the House of Lords.

The move marks a significant climbdown for the government, which had promised sweeping employment reforms as part of its New Deal for Working People. Ministers now say the change is necessary to prevent delays to the wider legislation, which has faced repeated attempts in the Lords to insert a six-month threshold.

Other flagship day-one rights, including sick pay and paternity leave from the first day of employment, will still come into force in April 2026. The new Fair Work Agency, which will enforce the reforms, will also be established in 2026.

A government source insisted that most unions had accepted the compromise, although Unite said Labour had undermined workers’ confidence.

Business groups, which held talks with ministers and union leaders, welcomed the concession. In a joint statement they said companies would be “relieved”, while warning they still had “concerns about many of the powers” in Labour’s wider package.

A major shift from a core Labour manifesto promise

Under current law, employees can only claim unfair dismissal after two years of continuous service, with firms required to show a fair reason for dismissal and that they followed a reasonable process.

Labour had pledged to abolish this qualifying period entirely and introduce a new legal probation period, expected to last around nine months. It was one of the most prominent promises in Labour’s employment platform ahead of last year’s general election.

Pressed on whether the reversal amounted to a breach of the manifesto, Business Secretary Peter Kyle said it did not. He argued the party’s commitment was to a process that brought “people together”, rather than reforms that “pit one side against another”.

Kyle said unions and employers had jointly agreed on the compromise and that it was not his job “to stand in the way of that”.

The government will now adopt the Lords’ preferred timeline of six months and drop the plan for a separate probation framework.

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Tribunal fears and mounting political pressure

Behind the scenes, concern had been growing that granting day-one protection could overwhelm an employment tribunal system already struggling with extensive backlogs. One union source told the BBC that “the vast majority of unions” involved in negotiations were comfortable with a six-month period.

The Trades Union Congress backed the shift, saying the priority was to deliver the promised rights from next April, including sick pay from day one. TUC General Secretary Paul Nowak urged peers to support the legislation and ensure it passed without further delay.

Kate Nicholls of UK Hospitality called the change “pragmatic”, saying it addressed one of the sector’s biggest concerns. She said the six-month period would give businesses “much-needed breathing room” and help protect job creation.

Deep frustration inside Labour and fierce criticism from opponents

Not everyone in Labour welcomed the decision. MP Andy McDonald branded the change a “complete betrayal” of the New Deal for Working People he helped draft. He vowed to fight for the original plan to be reinstated.

Unite, one of Labour’s most influential affiliated unions, delivered the sharpest condemnation. General Secretary Sharon Graham said the bill had been reduced to “a shell of its former self” and warned that continued concessions would damage trust among workers. “Labour needs to keep its promises,” she said.

The Conservatives seized on the climbdown, calling it “humiliating”. Shadow business secretary Andrew Griffith said the reforms remained “not fit for purpose” and urged Sir Keir Starmer to “ditch every single job-destroying anti-growth measure”.

What happens next

The revised measure is expected to help the Employment Rights Bill move through the Lords after weeks of delay. Ministers hope the compromise will give the legislation a smoother passage and allow the government to focus on rolling out its broader employment reform package in 2026.