UK Softens Unfair Dismissal Plan After Strong Pushback From Businesses

Post by : Saif Nasser

Britain’s government has revised one of its major labour reform proposals after strong resistance from business groups. The change affects new rules on unfair dismissal rights, a key part of the upcoming Employment Rights Bill that the Labour government has been working to pass.

Originally, the plan would have allowed workers to challenge unfair dismissal from their very first day at a job. But many businesses argued that this would make hiring riskier and more difficult, especially for small companies. After weeks of discussions, the government announced that employees will now qualify for unfair dismissal protection after six months instead of from day one.

The government said this adjustment removes the last major hurdle for the Employment Rights Bill to move forward. It presents the change as a balanced decision that supports both workers and employers.

The response to the revised bill has been mixed. Trade unions welcomed the reduction from the current two-year waiting period, calling it a meaningful improvement for workers. They also appreciated new plans to introduce day-one rights for sick pay and paternity leave starting in April 2026. However, some unions said they were disappointed that certain promises were not fully delivered. The Unite union criticised the bill, saying it had lost much of its original strength and failed to ban fire-and-rehire practices and zero-hours contracts as previously expected.

Business groups, however, welcomed the amendment. Six major industry bodies, including the Confederation of British Industry and the British Chambers of Commerce, said the six-month period was a practical and familiar standard. These groups also asked the government to continue discussions on other issues affecting employers, such as seasonal work rules and guaranteed hours.

Government officials defended the reforms. Business and Trade Secretary Peter Kyle said the goal was to create a better balance between workers and employers, leading to smoother workplaces and higher productivity. He argued that the new policies were not meant to create conflict but to improve dialogue and fairness.

The Employment Rights Bill is one of the Labour Party’s major promises. After returning to power in 2024 following 14 years in opposition, Prime Minister Keir Starmer and Finance Minister Rachel Reeves pledged to revive the UK economy, which has struggled with slow growth since the 2007–08 financial crisis. They believe stronger worker protections can help make the labour market more stable and prevent major strikes like the ones that disrupted services in recent years.

However, the changes did not escape criticism from the political opposition. Kemi Badenoch, leader of the Conservative Party, called the revision a “humiliating U-turn” and argued that the bill still included measures that could hurt businesses and weaken economic growth.

The government says most parts of the bill will not come into effect before 2026. It promised further consultations on secondary rules and confirmed that any future changes to the unfair dismissal waiting period would require a full act of Parliament. It also committed to lifting the cap on compensation for unfair dismissal, something many unions see as a major improvement for workers.

Some union leaders welcomed the final shape of the bill despite its compromises. Mike Clancy, General Secretary of the Prospect union, said the reforms will make the system simpler and provide stronger protection for workers. He called the bill “a good deal for working people” and credited trade unions for negotiating realistic and effective changes.

As the Employment Rights Bill moves closer to becoming law, both sides—workers and employers—will be watching closely to see how the final rules shape the future of the UK workplace.

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