Labour is under pressure to ditch Angela Rayner‘s ‘job killing’ workers’ rights agenda after watering down her controversial plan for day one employment rights.
In a humiliating U-turn, the government last night announced it was dropping Ms Rayner’s plan to give people the right to sue their employer for unfair dismissal on their first day in the job.
The right had been a key Labour manifesto pledge and Left-wingers last night accused the government of a ‘sellout’.
But employers had warned the move would become a shirkers’ charter and destroy opportunities for young people trying to get their first job.
Ministers were also locked in a standoff with the House of Lords, where opposition peers were delaying the entire Employment Rights Bill over the issue.
The U-turn comes just days after Downing Street said it would resist all attempts to water down the plan.
Culture secretary Lisa Nandy said the ‘compromise’ brokered at secret talks with business and union leaders, would enable the legislation to pass. Day one rights to sick pay will still go ahead.
‘We’ve reached a compromise,’ she said. ‘Will it please everybody? No, it won’t. But when you put this package together, getting this onto the statute book has been long overdue and will make a massive difference to people across the country.’
The decision to water down day one rights is a blow to Angela Rayner, who had championed the controversial plan as Deputy PM
Shadow business secretary Andrew Griffith urged the PM to ‘grow a backbone’ and dump the entire Employment Rights Bill
But ministers are now facing calls to ditch the entire Employment Rights Bill, which the government’s own assessment found will saddle firms with an extra £5 billion a year in red tape.
Shadow business secretary Andrew Griffith said: ‘Shadow Business Secretary, Andrew Griffith, said: ‘This humiliating U-turn on a Labour flagship bill is a Conservative victory and will give some relief to business.
‘But this is just one element of this rushed 330-page, job-killing legislation. It doesn’t change the fact the Bill is still not fit-for-purpose, nor does it change the fact it will give unions the ‘Right to Roam’, ban banter in pubs, or end flexible working.
‘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.
‘Only the Conservatives will stand up for business and jobs to deliver a stronger economy.’
Senior business figures echoed the call for the legislation to be scrapped and said it was time for Labour to get serious about growth.
Entrepreneur Luke Johnson, former chairman of Gail’s Bakery said the decision was ‘good news as far as it goes, but added: ‘The entire bill is bad for jobs, investment and living standards and it should be entirely scrapped.’
Alex Hall-Chen, of the Institute of Directors, said: ‘Time and time again business leaders have told us that day one protections against unfair dismissal would increase the cost of employment and disincentivise hiring. The government’s climbdown will give employers the confidence that they can correct hiring mistakes without risking lengthy and expensive tribunal cases.
‘Whilst this change represents significant progress for employers, we continue to have concerns about other measures in the Bill, particularly around guaranteed hours, trade union recognition, and industrial action thresholds.’
CBI chief Rain Newton-Smith urged ministers to water down the workers’ rights charter this week
However, the decision also triggered a Labour revolt last night.
Former shadow chancellor John McDonnell branded the decision a ‘sellout’, adding: ‘If it’s unfair to sack someone, it’s unfair whenever it occurs whether it’s day one or after 6 months. The principle is fairness.
Ms Rayner declined to comment.
But Labour MP Justin Madders, who is a close ally of the former deputy PM, said the decision to axe a key manifesto commitment was a ‘very serious matter’.
He added: ‘We will need a great deal of convincing that this is the right thing to do.’
Unite union boss Sharon Graham said the legislation was now ‘a shell of its former self’. She added: ‘With fire and rehire and zero hours contracts not being banned, the Bill is already unrecognisable.
‘These constant row backs will only damage workers’ confidence that the protections promised will be worth the wait. Labour needs to keep its promises.’
Workers will not now get the right to claim unfair dismissal until they have been in a job for at least six months. The period is shorter than the current two years, but is designed to ease fears among employers that the day one plan would have made them a target for vexatious claims from staff who have only just started.
Ministers have also agreed that the new six-month entitlement can only be reduced in future by primary legislation.
CBI chief rain Newton-Smith described the legislation this week as ‘disappointing and damaging’ and accused ministers of ignoring employers’ concerns.
‘Business is not just a resource to be taxed when the going gets tough. They are the ones creating jobs, building opportunities, lifting living standards and driving real change in communities,’ she said.
Business secretary Peter Kyle came under fire over the issue at this week’s CBI conference and hinted at a potential climb down.
No 10 ruled out any concessions on Monday, saying the Prime Minister would resist all attempts to water down the Employment Rights Bill in the House of Lords.
The PM’s spokesman said: ‘The Employment Rights Bill is good for workers, good for businesses, and good for the economy.
‘We will overturn all attempts to scupper our plans, including watering down day one protection from unfair dismissal and limiting the ban on exploitative zero hours contracts.’
A spokesman for the Department for Business and Trade said ministers had brokered talks between employers and unions in recent days to reach the compromise.
The spokesman said day one rights to sick pay and paternity leave would still be introduced in April next year. But the right to claim unfair dismissal from the first day of employment has been dropped.
The spokesman said: ‘Reforms to benefit millions of working people, including some of the lowest paid workers, would otherwise be significantly delayed if the Bill does not reach Royal Assent in line with our delivery timetable. Businesses too need time to prepare for what are a series of significant changes.’
Business leaders have savaged the Employment Rights Bill, which the government’s own assessment shows will cost firms £5billion a year in extra red tape. But the right to claim unfair dismissal has been the biggest single bone of contention.
