Labour accused of another manifesto breach after major workers’ rights U-turn

The Labour government is facing accusations of two manifesto breaches in as many days after turning its back on a promise to protect workers from unfair dismissal from day one in a job.

A day after Rachel Reeves confirmed an extended freeze on income tax thresholds that critics said amounted to a manifesto-breaching tax hike on working people, the business secretary announced a key measure in the flagship Employment Rights Bill would be watered down.

The qualifying period for unfair dismissal is currently two years, and Labour said in their manifesto they would bring it down to one day.

But Peter Kyle announced on Thursday it would now be six months, having faced opposition from businesses.

Mr Kyle defended the change, insisting “compromise is strength”.

Another minister, 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.”

She said there was a risk no progress would be made on the bill if there was no compromise and said the decision was made following discussions between businesses, the TUC union and the government.

Ms Phillilpson admitted since the U-turn she had not spoken to Angela Rayner, the ousted deputy prime minister who had led the campaign for new employment rights.

Tory leader Kemi Badenoch described it as “another humiliating U-turn”, and a number of Labour MPs aren’t happy.

Andy McDonald, MP for Middlesbrough and Thornaby East, branded the move a “complete betrayal”, while Poole MP Neil Duncan-Jordan said the government had “capitulated”.

Former employment minister Justin Madders, who was sacked in Sir Keir Starmer’s reshuffle earlier this year, also disputed claims the move did not amount to a manifesto breach.

“It might be a compromise,” he said, “but it most definitely is a manifesto breach.”

What did the manifesto say?

The Employment Rights Bill was a cornerstone of Labour’s 2024 election manifesto, and also contains measures that would ban zero-hours contracts.

The party manifesto promised to “consult fully with businesses, workers, and civil society on how to put our plans into practice before legislation is passed”.

“This will include banning exploitative zero-hours contracts; ending fire and rehire; and introducing basic rights from day one to parental leave, sick pay, and protection from unfair dismissal,” it said.

How did we get here?

But the legislation – which was spearheaded by former deputy prime minister Angela Rayner – has been caught in parliamentary ping pong with the House of Lords.

Last month, some peers objected to the provisions around unfair dismissal, suggesting they would deter some businesses from hiring.

They also opposed Labour’s move to force employers to offer guaranteed hours to employees from day one, arguing zero-hour contracts suited some people.

Ministers said reducing the qualifying period for unfair dismissal turned the bill into a “workable package”.

Businesses have largely welcomed the change, but unions gave a more hostile response.

Sharon Graham, the general secretary of Unite, said the bill was now a “shell of its former self”.

“With fire and rehire and zero-hours contracts not being banned, the bill is already unrecognisable,” she said.

The TUC urged the House of Lords to allow the rest of the legislation to pass.

Paul Nowak, the general secretary, said: “The absolute priority now is to get these rights – like day one sick pay – on the statute book so that working people can start benefitting from them from next April.”

‘Strikes the right balance’

The Resolution Foundation said the change in the unfair dismissal period was a “sensible move that will speed up the delivery of improvements to working conditions and reduce the risk of firms being put off hiring”.

It said the change “strikes the right balance between strengthening worker protections and encouraging businesses to hire” and deliver “tangible improvements to working conditions”.

The Confederation of British Industry (CBI) added: “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.

“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.”