A psychoanalyst might have some ideas as to why Keir Starmer’s thoughts have suddenly turned to the subject of unfair dismissal. But on the face of it, the government’s U-turn on giving workers the right to sue their employers for unfair dismissal from day one of their employment does seem to mark a change in its relations with business.
The Employment Rights Bill had become bogged down in the House of Lords as peers and business leaders warned of the bizarre consequences of the legislation. The ability to sue for unfair dismissal would have provided a field day for job applicants who managed to land themselves a role for which they were wholly unsuitable – and who would find themselves unsackable. Employers have often spoken of people who are offered jobs but who don’t even turn up to work on their first day, let alone do anything useful. Such people could well have been able to collect a salary for weeks as their employer was obliged to go through the procedural motions of sacking them ‘fairly’.
With the legislation as it was, no employer would have been able to take a risk on an applicant who had slightly wild ideas – and who might turn out to be either a great success or a miserable failure. Yet the sudden U-turn, which followed business secretary Peter Kyle’s address to the CBI conference on Monday, is hardly a complete capitulation.
Business has had virtually nothing to cheer since this government came to power 17 months ago
Many nasties remain in the legislation. The protection against unfair dismissal will still be shortened from two years to six months. Employees will still be able to claim rights to paternity leave and sickness benefit from day one of their employment. Zero-hour contracts will still be banned, playing havoc with businesses with highly seasonal custom. Employers will still find themselves at the mercy of the Fair Work Agency, which will have rights to bring a case on an employee’s behalf and will almost certainly increase employment tribunal claims.
The Bill will still embolden trade union rights. Employers may be forced to recognise a trade union if as little as 2 per cent of employees are members. The threshold for calling a strike will be lowered, with a union requiring only a simple majority of members who voted rather than at least 40 per cent of those eligible to vote.
The Employment Rights Bill was a relatively rare phenomenon in the parliament: an issue on which the Lib Dems and Conservatives were both opposing the government and for the same reasons. But yesterday’s change of heart does look to be a particular success for Kemi Badenoch, who brought it up in her reply to Wednesday’s Budget speech. For now, at least, the Conservatives seem to have the ear of business; on this issue they have not been pushed aside by Reform UK.
It would seem to be a defeat, on the other hand, for Angela Rayner, whose baby the Employment Rights Bill was. Is it a sign that Starmer now feels a little more comfortable in the face of attacks from the left of the party, especially after backbenchers have been thrown the red meat of the lifting of the two-child cap on child benefits?
The trouble Starmer faces now is that this change is unlikely to guarantee the swift passage of the Employment Rights Bill through the Lords. Business has had virtually nothing to cheer since this government came to power 17 months ago – even though at the time of its election Labour seemed to have good support from business people, notably Richard Walker, CEO of Iceland, and even, at a late stage, Jim Ratcliffe of Ineos (whose business has since been all but murdered by Ed Miliband). Perhaps they thought that siding with a party whose victory looked inevitable would at least get them a seat at the table when it came to negotiating stuff like the Employment Rights Bill. The change of heart to the Bill is welcome but still seems scant reward.
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