Britain’s biggest business groups have urged Conservative peers to stop blocking Labour’s landmark workers’ rights bill in the House of Lords to avoid throwing away a compromise deal reached with trade unions.
With the clock ticking before Christmas, six of the country’s biggest employers’ groups warned that failure to pass the legislation before parliament rises on Thursday could put at risk a deal brokered with bosses and union leaders.
In a letter to the business secretary, Peter Kyle, the employers’ groups – the Confederation of British Industry, the British Chambers of Commerce, the Chartered Institute of Personnel and Development, the Federation of Small Businesses, the Recruitment and Employment Confederation, and Small Business Britain – wrote: “Now is the time for parliament to pass the bill.”
Labour staged a U-turn last month to ditch a key manifesto pledge guaranteeing workers protection against unfair dismissal from day one of employment, instead of the current two-year waiting period.
In a deal with most trade union leaders, ministers tabled a six-month period as a compromise – despite the climbdown triggering backbench anger among some Labour MPs who accused Keir Starmer’s government of betrayal.
However, peers voted down the bill for a fourth consecutive time, imposing amendments tabled by Tory peers protesting against a concession made as part of the deal to lift a cap on compensation claims for unfair dismissal.
It comes as some business leaders warned lifting the cap could enable some high earners to secure unlimited compensation.
Workers can currently only receive payouts equivalent to the lower of their annual salary or £118,223 if they win a claim for ordinary unfair dismissal.
TheCityUK – which represents banks and other financial services companies – has written to ministers after the surprise amendment to the employment rights bill left its members feeling blindsided, and fearing open-ended payouts for highly paid staff, a source familiar with the letter told the Guardian.
TheCityUK’s members, which employ some of the UK’s highest-paid staff in areas such as investment banking, warned it could create an avenue for well-paid bankers or City executives to secure big windfalls if they can successfully argue that they were unfairly fired.
Those prospects could deter companies from investing in the UK and could make bosses more hesitant to take a chance on hires, the lobby group has warned ministers.
Ministers vowed there would be no further compromises in an attempt to force through the legislation before Christmas, with sources suggesting further sittings of parliament could be used.
The bill is expected to be passed without any amendments in the Commons on Monday and will be back in the Lords on Tuesday. If peers insist on tabling further amendments, the bill would need to again pass back and forth between the two houses before it receives royal assent.
Writing in their letter to Kyle, the business groups said they wanted to focus on securing compromises from the government in the phase of secondary legislation that would follow the primary passage of the bill. Kyle has pledged to listen to bosses concerns and to hold a series of 26 consultations after the bill becomes law.
The lobby groups warned that blocking the bill could put cooperation between business leaders, the government and trade unions at risk, and could lead to the loss of the six-month compromise.
“We believe that the best way forward is to keep working with the government and trade unions to find balanced solutions through secondary legislation. To avoid losing the six months qualifying period, we therefore believe that now is the time for parliament to pass the bill.”
Writing in response, Kyle said Labour had made “difficult but necessary compromises” to make progress.
“If we can make progress towards achieving royal assent, I can assure your members, and the trade unions, that we are keen to see the spirit of consensus and cooperation shown to date continue in its implementation,” he said.
Business leaders had stepped up their lobbying efforts against the workers’ rights changes, warning that companies could cut jobs as a result or be forced to put up their prices – with the potential to stoke inflation.
Under Kemi Badenoch, the Conservatives have attempted to make in-roads to repairing the party’s bruised relationship with business leaders by promising to rip up Labour’s changes to employment rights.
Although the business groups called for the bill to be passed by parliament, they also warned they remained unsatisfied with the removal of the cash cap on compensation for unfair dismissal.
Andrew Griffith, the shadow business secretary, said: “Different business groups will differ on the best tactic to secure any common sense from this government, but it’s clear not a single one supports scrapping the cash cap, which only benefits high earners and will lead to fewer jobs and lower growth.”
