The Labour government has abandoned its manifesto pledge to give workers protection from unfair dismissal from their first day in a new job, agreeing instead to a six‑month qualifying period in a late‑night climbdown designed to rescue its flagship Employment Rights Bill.

The change, confirmed in a government statement on Thursday evening, follows weeks of lobbying by business groups and a heavy defeat in the House of Lords, where peers twice voted to keep a qualifying period and warned that true day‑one rights would damage hiring and undermine confidence among employers.

Ministers insist the revised package – which still slashes the current two‑year qualifying period to six months and retains other promised “day‑one” rights such as sick pay and paternity leave – does not amount to a breach of faith with voters. But unions, employment‑rights lawyers and several Labour MPs say the move strips the centrepiece out of a flagship reform and raises wider questions about the government’s willingness to stand by its promises.

An examination of Labour’s election pledges, parliamentary debates and the sequence of private negotiations with unions and business groups shows a clear evolution in the government’s position: from unequivocal public commitments to “day‑one” unfair dismissal protection, to a compromise ministers had previously rejected as incompatible with its mandate.

During the 2024 general election campaign, Labour’s “New Deal for Working People” was repeatedly presented as a defining offer to voters and the party’s trade union base. The manifesto promised to deliver “basic rights from day one to parental leave, sick pay, and protection from unfair dismissal”, with the package to be implemented in full within 100 days of taking office.

At the time, the contrast with existing law was stark. Under current rules, most employees must complete two years’ continuous service before they can bring a claim for ordinary unfair dismissal at an employment tribunal. Only a limited list of “automatically unfair” reasons – such as whistleblowing, trade union activity or asserting certain statutory rights – attract day‑one protection, as do discrimination claims under equality legislation.

When the Employment Rights Bill (ERB) was introduced in early 2025, ministers framed it as “the biggest upgrade in workers’ rights in a generation”. The original text would have removed the qualifying period for ordinary unfair dismissal entirely, creating a genuine day‑one right for millions. In the Commons, employment minister Kate Dearden told MPs the government had been “elected on a promise of protection from unfair dismissal not two years, not six months, but from day one” and said attempts to water this down would “breach the clear mandate we have from the British people”.

However, the House of Lords took a very different view. On 16 July peers voted by 304 to 160 – a majority of 144 – to back a Conservative‑led amendment that reinstated a qualifying period, set at six months. Tory peer Lord Sharpe of Epsom warned that day‑one protection would “fundamentally alter the balance of risk in hiring” and could deter firms from taking on younger and “riskier” workers, particularly in sectors such as hospitality and retail.

Ministers initially vowed to overturn the change. MPs rejected the Lords amendment twice, sending the original day‑one proposal back to the upper house and prompting an increasingly pointed stand‑off over the constitutional convention that peers should not block clear manifesto commitments.

At the same time, pressure outside Parliament was intensifying. By the autumn, official figures were showing signs of a weakening labour market, and employer groups stepped up warnings that the ERB, as drafted, could hurt job creation just as the economy was slowing. At the CBI’s annual conference, its director‑general Rain Newton‑Smith publicly criticised day‑one unfair dismissal as “a step backwards”, arguing it would make it harder for businesses to correct recruitment mistakes.

A coalition of six major business organisations – including the CBI, Institute of Directors, British Chambers of Commerce and Federation of Small Businesses – issued a joint statement saying they were “relieved” when reports emerged that the government was reconsidering. They argued that a six‑month qualifying period was “crucial for business confidence to hire”, while still significantly extending protection for workers compared with the current two‑year rule. They warned, however, that they still had concerns over other elements of the Bill, including new rules on guaranteed hours and restrictions on “fire and rehire”.

Until this week, Downing Street maintained in public that it would “overturn all attempts to scupper” key parts of the Bill, explicitly naming efforts to dilute day‑one unfair dismissal rights. But accounts from those involved in the talks, reported by several outlets, indicate that ministers were already exploring escape routes.

According to those accounts, a series of “crunch meetings” took place in the Churchill Room at the Department for Business and Trade on the Monday and Tuesday before the announcement. Around the table were senior officials, union leaders and representatives of major employer bodies. Over what one participant described as “tea and sandwiches and some fairly blunt conversations”, the outline of the eventual deal emerged.

Under the compromise, the government agreed to abandon its insistence on day‑one unfair dismissal rights and accept a six‑month threshold in line with the Lords’ position. In exchange, business groups dropped a separate demand for a statutory nine‑month probation period, during which a wide range of protections could have been suspended. The government also secured agreement to leave untouched other planned day‑one rights on sick pay, paternity leave and flexible working, which are still due to come into force from April 2026.

To reassure unions and backbenchers, ministers added two sweeteners to the package. First, any future changes to the qualifying period for unfair dismissal will have to be made by primary legislation, making it harder for a future government to extend it again via secondary regulations. Second, the long‑standing cap on compensation for unfair dismissal – introduced under a previous Conservative administration – will be removed, potentially increasing awards in the most serious cases.

The Department for Business and Trade has presented the outcome as a “workable package” that balances the interests of workers and employers and gives the Bill a clear path to royal assent on the government’s timetable. Business Secretary Peter Kyle told broadcasters that both sides had made “big concessions” – business giving up the current two‑year period, unions giving up day‑one – and insisted that compromise was “a sign of strength, not weakness”.

Senior ministers have also pushed back hard against accusations of a manifesto breach. Education Secretary Bridget Phillipson has argued that the election document promised not only enhanced rights but also full consultation with employers and unions, and that delivering a Bill that commands support across industry and the labour movement is consistent with that pledge. She and others have warned that without a deal, there was a “very real prospect” the entire ERB would have been delayed beyond April 2026, postponing day‑one sick pay and other reforms for millions.

However, for many on Labour’s left and in parts of the trade union movement, the distinction is academic. Andy McDonald, the former shadow minister who helped design the original New Deal for Working People, called the change a “complete betrayal” of what members thought they were voting for and said he would campaign to reinstate true day‑one protection. Former shadow chancellor John McDonnell described the move as a “sell‑out”, arguing that “if sacking someone unfairly is wrong at six months, it is wrong on day one”.

Unite’s general secretary Sharon Graham has gone further, describing the Employment Rights Bill as “a shell of its former self”. She points not only to the unfair dismissal reversal but also to what she says are diluted provisions on outlawing zero‑hours contracts and “fire and rehire” practices. A number of Labour MPs, including Bell Ribeiro‑Addy, Richard Burgon and Kate Osborne, have complained that there was no proper discussion with the Parliamentary Labour Party before the U‑turn was agreed.

Other unions have taken a more pragmatic stance. The TUC’s general secretary Paul Nowak has called the Bill “essential” and said the “absolute priority” now is to get its core protections – especially day‑one sick pay, which unions say will benefit around eight million workers – on to the statute book. Several union insiders have contrasted the six‑month deal favourably with the earlier nine‑month probation idea, which they feared could have left new starters with even fewer practical rights.

The episode has also revived debate about the role of the Lords in policing manifesto commitments. Under the Salisbury‑Addison convention, peers are generally expected not to block pledges clearly set out in a governing party’s election platform. In this case, the government argued that day‑one unfair dismissal fell squarely into that category. But many peers, including Liberal Democrats and crossbenchers as well as Conservatives, felt the policy went beyond what the public had understood and claimed a responsibility to scrutinise its economic impact.

Politically, the timing of the U‑turn could hardly be more awkward for the government. It comes in the same week as a Budget that increased taxes by about £26bn despite pre‑election assurances about “no return to austerity” and keeping taxes “as low as possible” for working people. Opposition parties have seized on the combination to accuse the prime minister of developing a pattern of over‑promising and rowing back once in office. Conservative leader Kemi Badenoch branded the ERB decision “another humiliating U‑turn” and vowed that a future Tory government would scrap what she called the “most anti‑business elements” of the legislation.

In practical terms, the shift from a two‑year to a six‑month qualifying period still represents a significant legal change. Government figures cited in HR industry publications suggest that around six million additional workers will gain the right to bring ordinary unfair dismissal claims once the new threshold takes effect, even without day‑one status. Ministers say that, combined with the removal of the compensation cap, this will act as a powerful deterrent to arbitrary sackings.

Yet critics counter that some of the most vulnerable workers – including those on insecure contracts or in high‑turnover sectors – are precisely the people least likely to reach the six‑month mark in a single job, leaving them effectively without recourse if they are dismissed unfairly early on. They also warn that employers determined to avoid liability may simply manage probationary periods up to the new threshold.

With the revised Bill now expected to clear the Lords, attention is likely to shift to how quickly and robustly the new rights are implemented, and whether ministers come under pressure to revisit the unfair dismissal regime in a future Parliament. For now, Labour has chosen to bank what it can – and to accept a politically painful compromise on one of its most symbolic promises. Whether voters and its own supporters see that as responsible pragmatism or as a broken pledge may shape the next phase of the government’s relationship with the people it promised to protect.