Unlimited payouts for unfair dismissal planned as Labour tries to secure support for watered-down workers' rights

The long-awaited Employment Rights Bill could see the £118,000 limit on compensation scrapped as ministers try to win over unions angry at the watering down of proposals last week.

Employment experts have warned that the changes could see bosses be more "cold-blooded" during probation periods in a bid to avoid payouts.

Last week, Labour confirmed that the Bill, which has been stuck in the House of Lords for months, would only introduce the right to claim for unfair dismissal after six months of service.

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This broke a manifesto promise to introduce the right from day one of employment.

Andrew Griffith, the shadow business secretary, told the Times: "Moving to unlimited payouts at employment tribunals is the sort of out-of-touch idea which this government seems to specialise in.

"It would benefit higher-paid workers the most, but be a huge burden on the tribunal system and businesses alike."

It is hoped that the standoff between the Government and the House of Lords could be ended by the changes being made to the package.

The Bill was a cornerstone of the brief managed by former Deputy Prime Minister Angela Rayner.

In a separate bid to avoid a public spat with Rayner, Business Secretary Peter Kyle has reportedly struck a deal to fast-track the implementation of the Bill.

Under the compromise, meant to see of a Labour rebellion when the Bill returns to the Commons, the protections would come into effect from January 2027.