Labour's flagship employment rights bill has passed its final parliamentary hurdle and is set to become law before Christmas, which would mark the most significant expansion of workers' rights in a generation.
The legislation passed its final stage in the House of Lords after Conservative peer Lord Sharp, the shadow trade and business minister, withdrew a last-minute amendment during parliamentary “ping pong”. This move removed the final hurdle to passage of the bill.
Prime Minister Sir Keir Starmer described the moment as a major milestone for workers across the country.
“This is a huge victory for working people in every part of the country,” he said. “We have introduced the biggest upgrade to workers' rights in a generation. Today our plans were passed by Parliament, and will soon become law.”
The bill applies to England, Scotland and Wales, but not Northern Ireland, and is expected to receive royal assent later this week. Most of its measures will require secondary legislation before they can be implemented.
Under the new law, workers will have access to statutory sick pay and paternity leave from their first day on the job. The law also introduces stronger protections for pregnant women and new mothers.
Labor originally promised to give workers the right to claim unfair dismissal from day one, but backed out in November after concerns from business groups. Instead, enhanced unfair dismissal protections will come into effect after six months of employment – now the most significant reform of the Bill.
Trade unions welcomed the passage of the bill but warned against further weakening it. Unite general secretary Sharon Graham said it should now be implemented “without any relaxation or delay”.
“The bill is already deeply flawed, not least by the failure to ban fire and redeployment and zero-hours contracts,” he said.
TUC general secretary Paul Novak described the vote as a “historic day and an early Christmas gift to working people across the country”.
“Ultimately, working people will enjoy greater protection at work, better pay and dignity thanks to this bill,” he said, urging the government to implement the reforms “swiftly.”
However, conservatives criticized the timing of the legislation, arguing that it risked harming employment.
“It is ironic that Labour's job-destroying unemployment bill was passed on the same day as official figures confirmed that unemployment has increased every month under this government,” a party spokesperson said, citing figures that showed unemployment had risen to 5.1 per cent in the three months to October.
Shadow Business Secretary Andrew Griffiths warned that the bill would “increase costs on small businesses, stifle hiring, and ultimately young people and job seekers will have to pay the price”.
Business groups including the British Chambers of Commerce and the Federation of Small Businesses said earlier this week they were concerned about aspects of the reforms, but acknowledged that with the six-month eligibility period retained, the bill should be passed now to provide certainty.
Employment lawyers said employers should now shift their focus from speculation to implementation.
Florence Brocklesby, founder of Bellevue Law, said: “Regardless of views on the pros and cons of the reforms, employers will welcome certainty and the ability to plan. Implementation should be treated as a major project with adequate senior management and HR resources.”
He warned that the new six-month unfair dismissal limit will require stronger recruitment processes and prompt performance management, while removing the compensation cap will be most important for employers with large numbers of highly paid staff.
Joe McKee, employment partner at Michelmores, raised concerns about uncapped unfair dismissal damages, saying they could “encourage claims and create fear in employers”, potentially discouraging recruitment.
Dave Chaplin, chief executive of ContractorCalculator, said the reforms risked reducing permanent hiring among small businesses.
“For SMEs, a tough six months of headwinds increases the hiring risk dramatically,” he said. “The irony is that while the bill strengthens protections for people already in work, it also increases barriers for people trying to get a job.”
With royal assent granted, employers and employees alike are now bracing for one of the biggest changes to workplace regulation in decades – with the real impact set to emerge as the reforms are phased in.
jamie young
Jamie is a senior reporter at Business Matters, with over a decade of experience in UK SME business reporting. Jamie has a degree in Business Administration and regularly attends industry conferences and workshops. When Jamie is not reporting on the latest business developments, he is passionate about mentoring budding journalists and entrepreneurs to inspire the next generation of business leaders.
