Government U-turn on key workers' rights pledge as Starmer scraps reform championed by Rayner

The protections will now be in place from six months after concerns were raised about the potential change in the Employment Rights Bill and the effect it could have on small businesses.

The change will now make the bill a "workable package", the Government says, with day one rights potentially stopping it from clearing parliament.

Workers will still get day one entitlements for sick pay and paternity leave, which will come into effect in April 2026.

Culture Secretary Lisa Nandy has called the U-turn "the right thing to do".

Speaking to LBC's Andrew Marr, she they'd reached something of an impasse in the House of Lords around this issue of day one rights.

She said: "When this legislation is passed, you'll be entitled to them after six months. I think that's a reasonable and a fair compromise.

"As a proud trade unionist, I want to see us upgrade rights for working people in this country and I've wanted that for a long time.

"But I'm confident that this bill will do it and represent a significant step forward to give working people the security that they've been denied for too long."

Read more: Sir Keir Starmer defends Labour’s tax raid Budget and denies breaking manifesto promises

Read more: Labour has duty to deliver reforms to workers’ rights, Rayner tells Commons

Labour said in its 2024 manifesto: "We will 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."

Employees currently need to have been in a role for a minimum of two years before they are entitled to protection from unfair dismissal.

But business leaders and even think tanks had warned it could negatively impact firms.

In March, the Office for Budget Responsibility (OBR) warned the Government's Employments Rights Bill will have a "net negative impact" on the economy.

It wrote: "Employment regulation policies that affect the flexibility of businesses and labour markets or the quantity and quality of work will likely have material, and probably net negative, economic impacts on employment, prices, and productivity.

"Given these potentially significant impacts, we will incorporate a central estimate of the aggregate impacts of the policy package in our next forecast."

That is despite Labour hailing the bill as the biggest boost to pay and productivity in the workplace in a generation.

Plans for greater protection for those in work were first championed by sacked Deputy PM Angela Rayner while Labour was in opposition.

Labour branded this its 'Plan to Make Work Pay', with "a core part of the mission to grow the economy, raise living standards and create opportunities for people across the country."