Deputy Prime Minister Angela Rayner is at loggerheads with Business Minister Jonathan Reynolds over plans to give workers full employment rights from day one of their job, as concerns grow among businesses over the impact of the proposed reforms.
The disagreement centers on how the probationary period should function under the new system, which is part of Labour’s wider push to overhaul workers’ rights within the first 100 days of government.
Rayner is calling for staff to be given full employment rights, including the ability to bring unfair dismissal claims in employment tribunals, after a short probationary period. Currently, employees must work for at least two years to qualify for such protection. Reynolds, on the other hand, favors a longer probationary period of up to nine months, arguing that it strikes a reasonable balance between employee rights and business needs.
A Whitehall source described the debate as ‘intense’ and noted that reaching an agreement within the next two weeks remains uncertain. “Angela is less keen on a longer probation period, Reynolds thinks nine months is reasonable. It is unclear whether an agreement will be reached,” the source said.
The discussions come against a backdrop of growing discontent among business leaders, who argue that eliminating or drastically shortening probationary periods could deter hiring and stifle growth. Companies view probationary periods as essential for assessing new hires, and there are fears that the changes could lead to an increase in costly and time-consuming unfair dismissal claims.
The proposed reforms, led by Rayner, are part of Labour’s manifesto to strengthen workers’ rights, including ending zero-hours contracts, banning ‘fire and rehire’ practices, raising the minimum wage and increasing the right to request flexible work and a four-day working week. Labour’s pledge aims to “make work pay” and provide fundamental individual rights from day one, ending the current system that leaves workers waiting up to two years for protection against unfair dismissal, parental leave and sick leave.
While Rayner and Reynolds have held joint meetings with CEOs, unions and lobby groups to explain the proposed reforms, business leaders have expressed major concerns. A survey by the Confederation of British Industry (CBI) shows that 62% of members, including major companies such as AstraZeneca, Drax and PwC, believe Britain is becoming a less attractive place to do business and investments, citing upcoming labor market reforms. as the main concern.
The Institute of Directors’ economic confidence index, dubbed the ‘bosses’ union’, fell sharply from +7 in July to -12 in August, with recent news on labor rights cited as a key factor in the decline.
The disagreement between Rayner and Reynolds follows other internal divisions within the Labor cabinet, including dissatisfaction over the decision to scrap the winter fuel surcharge. Health Minister Wes Streeting recently expressed dissatisfaction with the policy, underlining broader tensions within the party as it balances reform ambitions with economic concerns.
This week is expected to be crucial in resolving the dispute as the government prepares to unveil its labor rights bill next month. Ministers have pledged to introduce the bill within the first 100 days of taking office, but sources say it remains “unclear” whether an agreement on day one rights will be reached in time. “To get [Chancellor] Rachel Reeves, Jonathan [Reynolds]and Angela [Rayner] the same place will be the point where we can wrap it up,” a Whitehall source noted.
A government spokesperson stressed that the priority remains economic growth and wealth creation, adding: “Our plan for better workers’ rights is designed to help people find safe work and create a more productive workforce. That’s why we’re working closely with business and civil society to find the balance between improving workers’ rights and supporting the brilliant companies that pay people’s wages.”
As Labor navigates these complex negotiations, the outcome will be closely watched by both workers and employers, with significant implications for the UK labor market and economic prospects.