Labour revolt over workers' rights U-turn after Starmer axed manifesto promise

MPs including a former minister who shepherded the Bill through the Commons have slammed the U-turn announced by the Government on Thursday.

The Department for Business and Trade axed proposals to remove the "qualifying period" for workers to make an unfair dismissal claim, which currently stands at two years.

The Bill had been caught in a stand-off between peers and MPs in the House of Lords over the original plan to give workers the protection on day one, as well as measures to ban "exploitative" zero-hours contracts.

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.

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Labour's manifesto explicitly 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.

The concession, which comes after some businesses voiced concerns about potential costs and recruitment challenges, sparked an immediate backlash among some backbenchers and the Unite union.

Labour MP for Middlesbrough and Thornaby East, Andy McDonald, branded the move a "complete betrayal" and vowed to push for its reversal.

He said: "we cannot support that halfway measure", adding: "This is a wrong-headed move and I will campaign to have this concession reversed."

Labour MP for Poole, Neil Duncan-Jordan, said: "There has been no discussion with the PLP about this.

"The Lords don't have primacy over a manifesto commitment, so why have we capitulated?"

Labour MP for York Central, Rachael Maskell, said: "Employers have nothing to fear from day-one rights, but workers have everything to fear from an employer who doesn't want day-one rights."

Another Labour MP said that the climbdown showed that Sir Keir and Ms Reeves were "weak" and had caved to external pressure, adding: "The shtick is this is a workers' Budget for working people, and then one of your flagship programmes, you knock off a key part of it.

"It's a manifesto breach."

Ex-employment minister Justin Madders, who was sacked in the Prime Minister's reshuffle earlier this year, also disputed Business Secretary Peter Kyle's claim that the move did not amount to a manifesto breach.

"It might be a compromise. It might even be necessary to get the Bill passed (as soon as possible). But it most definitely is a manifesto breach," the MP for Ellesmere Port and Bromborough said.

Speaking to broadcasters on Thursday evening, Mr Kyle insisted the compromise had been found by "unions and the employers" and "it's not my job to stand in the way of that compromise".

"They've gone through the difficult process of working together to find a compromise... it's my job to accept it," he said.

Mr Kyle also denied the concession was a breach of Labour's manifesto.

Unite boss Sharon Graham said the Bill had become "a shell of its former self" while TUC general secretary Paul Nowak said the "absolute priority" was to get the legislation on to the statute books.

"Following the Government's announcement, it is now vital that peers respect Labour's manifesto mandate and that this Bill secures royal assent as quickly as possible," Mr Nowak said.

Ms Graham said: "These constant row-backs will only damage workers' confidence that the protections promised will be worth the wait. Labour needs to keep its promises."

Business groups welcomed Thursday's concession, saying the qualifying period of six months was "crucial for businesses' confidence to hire and to support employment, at the same time as protecting workers".

However, they warned that firms would "still have concerns" about many of the powers within the Bill, including thresholds for industrial action, guaranteed hours contracts and seasonal and temporary workers.

"We remain committed to working with Government and unions to dealing with this in the necessary secondary legislation to implement the Bill," the six industry groups involved in discussions with trade unions said.

Tory leader Kemi Badenoch described the move as "another humiliating U-turn" for Labour and said the legislation still contains "measures that will damage businesses and be terrible for economic growth".

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."

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."