Cabinet members in disagreement over how far new employment protections should go
Angela Rayner is facing opposition from the Business Secretary over plans to hand workers full employment rights from day one in a job, amid a growing backlash from bosses.
Whitehall sources said Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds were in disagreement over how far reforms should go, amid concerns that far-reaching changes could put companies off hiring and damage growth.
The disagreement is understood to centre around how probation periods will work under the new system.
Ms Rayner is understood to be pushing to hand staff full-employment rights from day one following a short probation period, including the right to take companies to an employment tribunal for unfair dismissal. At the moment, people must be employed for at least two years to qualify for this right.
Mr Reynolds is said to favour shortening the qualification period for full employment rights but still requiring a probation period of almost a year.
“Day one rights is proving very difficult,” a Whitehall source said. “Angela is less keen on a longer probation period, Reynolds thinks nine months is reasonable. It’s unclear if an agreement will be reached.”
Conversations about how probationary periods will work under the new system are unders tood to have been “intense”, as the frontbenchers try to iron out their differences within Labour’s first 100 days in government. The self-imposed deadline for employment reform in practice gives them only a fortnight to agree.
A Labour source stressed that the two ministers were close friends and their disagreement was not acrimonious. They are MPs for neighbouring constituencies and have been jointly meeting business leaders to discuss their plans.
Businesses fear the changes as proposed will effectively amount to an axing of probation, which bosses view as crucial for allowing them to properly assess new recruits.
The division follows discontent among some cabinet members over the decision to scrap the winter fuel allowance. Wes Streeting, the Health Secretary, said he was “not remotely happy” about the policy.
Labour promised in its manifesto to overhaul workers’ rights to “include basic individual rights from day one for all workers, ending the current arbitrary system that leaves workers waiting up to two years to access basic rights of protection against unfair dismissal, parental leave and sick pay.”
The proposals are part of a package meant to strengthen workers’ rights and “make work pay”. The reforms are being spearheaded by Ms Rayner.
Other measures designed to boost employee rights also include ending zero-hour contracts, banning “fire and rehire” practices and increasing the minimum wage. Ministers also want to strengthen workers’ right to request flexible working and hand them the power to ask for a four-day week.
Ms Rayner and Mr Reynolds have held a series of joint meetings with chief executives, unions and lobby groups meant to reassure them and explain the extent of the reforms and how they will work.
However, executives have repeatedly voiced their concerns. A survey by the Confederation of British Industry (CBI) of its members, which include AstraZeneca, Drax and PwC, found 62pc believed Britain was becoming a less attractive place to do business and invest. Looming jobs market reforms were the most common reason given.
An economic confidence index produced by the Institute of Directors (IoD), which is sometimes nicknamed the bosses’ union, plunged from a three-year high of +7 in July to -12 in August. The IoD cited “newsflow in recent weeks on employment rights” as one of the reasons for the slump.
Business leaders are concerned that the proposals as they stand would trigger a wave of costly and time consuming unfair dismissal claims.
This will be a crunch week for discussions about the reforms as the Government gets closer to unveiling its employment rights bill next month. Ministers have promised to put forward the bill within the first 100 days of entering office.
Sources said it was “unclear” if an agreement on day one workers’ rights will be reached in time for the bill, with fears in Whitehall that vague plans will “really worry people”.
“Everyone is trying to get to an agreement so that they can consult on something quite clear,” a Whitehall source said.
“Getting [Chancellor] Rachel Reeves, Jonathan [Reynolds] and Angela [Rayner] in the same place will be the point at which we can close it off.”
A government spokesman said: “Our number one priority is economic growth and wealth creation which is why our plan for better workers’ rights is designed to help people into secure work and lead to a more productive workforce.
“This is why we are working in close partnership with business and civil society to find the balance between improving workers’ rights while supporting the brilliant businesses that pay people’s wages.”
