Sir Keir Starmer’s Labour government has found itself embroiled in a fierce and highly public internal dispute after ministers abandoned a flagship pledge to provide workers with unfair dismissal protections from their first day on the job. The decision, announced on November 28, 2025, has triggered accusations of “complete betrayal” from Labour backbenchers, union leaders, and other critics, while business groups have greeted the move as a pragmatic step forward for employers.
The controversy erupted just one day after Chancellor Rachel Reeves delivered a Budget that swung to the left, introducing a so-called “mansion tax” on high-value homes and abolishing the controversial two-child benefit cap. While these measures were initially welcomed by Labour’s left flank, the mood quickly soured when the government revealed it would not go ahead with its manifesto promise of ‘day-one’ unfair dismissal rights. Instead, ministers announced that the qualifying period for making such claims would be reduced from two years to six months—a compromise that has failed to satisfy many within the party.
According to The Independent, Labour’s manifesto had clearly committed to “basic rights from day one to parental leave, sick pay, and protection from unfair dismissal.” The new plan, however, will only guarantee day-one rights to sick pay and paternity leave, set to commence from April 2026, while the right to claim unfair dismissal will only be available after six months of continuous employment. The government has not yet specified when the new six-month period will take effect, though it is understood it will not be written directly into the employment bill itself.
The U-turn was immediately condemned by Labour MPs on the party’s left, several of whom had previously rebelled against welfare curbs. Rachael Maskell, one of the most vocal critics, said, “I stood on a manifesto where we said we would put day one rights in place and that did include unfair dismissal, so of course I am deeply disappointed to hear these changes have been made.” She added, “Above all, this is coming from the House of Lords, the unelected chamber.”
Other Labour MPs echoed her frustration. Justin Madders, a former government minister and ally of Angela Rayner—the architect of the original proposals—told The Independent, “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.” Andy McDonald, Labour MP for Middlesbrough and Thornaby East, branded the move a “complete betrayal” and vowed to campaign for its reversal, stating, “We cannot support that halfway measure.”
Unite, one of Labour’s largest donors, also expressed outrage. Its leader, Sharon Graham, told the BBC the bill had become “a shell of its former self,” warning, “These constant row-backs will only damage workers’ confidence that the protections promised will be worth the wait. Labour needs to keep its promises.” She described the government’s retreat as “absolutely a breach” of the party’s election manifesto and voiced fears of “further watering down” of the employment bill in the future.
Despite the backlash from within his own party and affiliated unions, Prime Minister Starmer and his ministers have insisted that the compromise was necessary to ensure the wider employment rights bill could be delivered on time. Education Secretary Bridget Phillipson defended the decision in an interview with BBC Radio 4’s Today programme, calling it a “pragmatic” move. “Sometimes in life, you have to be pragmatic to secure wider benefits,” she said, arguing that the deadlock over unfair dismissal could have “jeopardised” the entire bill, which also contains important new worker benefits such as immediate rights to sick pay and paternity leave.
Business Secretary Peter Kyle also denied that the change represented a breach of Labour’s manifesto, emphasizing the party’s commitment to consultation. “In the manifesto, what we said was that we would work with trade unions, with business, with civil society, in consulting on those protections that we’d be bringing forward,” he explained. “So, there are both parts to that, within the manifesto, the important rights and the consultation.” Kyle further argued, “It’s not my job to stand in the way of an agreed approach brokered between some unions and business groups.”
Business groups have universally welcomed the government’s climbdown, with Martin McTague, national chair of the Federation of Small Businesses, stating, “I can’t emphasize too much that this part of the bill was the most important thing to put right.” According to BBC News, industry representatives had warned that day-one unfair dismissal rights could discourage firms from hiring, especially in a fragile economic climate. The agreed six-month qualifying period, they say, is “crucial for businesses’ confidence to hire and to support employment, at the same time as protecting workers.” However, these groups have also flagged ongoing concerns about other proposed powers within the bill, such as thresholds for industrial action and the regulation of temporary and seasonal work.
Not all unions are opposed to the government’s approach. Paul Nowak, general secretary of the Trades Union Congress (TUC), struck a more conciliatory tone, telling The Independent that the “absolute priority” was to get the legislation on to the statute books as soon as possible. “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,” Nowak said.
The path to this compromise was not straightforward. The proposed employment rights bill had encountered stiff resistance in the House of Lords, where Conservative and Liberal Democrat peers twice teamed up with crossbenchers to insist on a six-month qualifying period rather than day-one rights, delaying its progress through Parliament. The government, seeking to avoid further deadlock and secure passage of the broader package of workers’ rights, ultimately conceded to the Lords’ position.
While the government maintains that the reduction from two years to six months is a “big step forward,” critics warn that the move sets a worrying precedent. Bell Ribeiro-Addy, Labour MP for Clapham and Brixton Hill, told the BBC, “Rolling back now is a huge problem because if we’re rolling back now, what other tweaks are we going to accept? What else are we going to get pushed into? We’re literally the Labour Party.” Former shadow chancellor John McDonnell was even more blunt, posting on X, “Is this a sellout? Yes, it certainly is. If it’s unfair to sack someone, it’s unfair whenever it occurs, whether it’s day one or after six months. The principle is fairness.”
Conservative leader Kemi Badenoch seized on the Labour U-turn, describing it as “another humiliating U-turn” for the government and warning that the remaining measures “will damage businesses and be terrible for economic growth.” Meanwhile, some Labour MPs privately complained that the decision was made without adequate discussion within the parliamentary party, with Neil Duncan-Jordan lamenting to PA Media, “The Lords don’t have primacy over a manifesto commitment, so why have we capitulated?”
As the dust settles, Labour’s leadership faces the daunting task of holding together a fractious coalition of MPs, unions, and business groups, all while delivering on its promise of a fairer deal for workers. The outcome of this row will likely shape not only the fate of the employment rights bill, but also the party’s credibility as it seeks to govern in turbulent times.
