Deputy Prime Minister Angela Rayner is at odds with Business Secretary Jonathan Reynolds over plans to give workers full employment rights from day one on the job, as concerns grow among businesses about the impact of the proposed reforms.
The dispute centres on how probationary periods will work under the new system, which is part of Labour’s wider efforts to reform workers’ rights during the first 100 days of government.
Rayner wants employees to have full employment rights, including the ability to bring unfair dismissal claims in employment tribunals, after a short probationary period. At present, employees must work for at least two years to qualify for this protection. By contrast, Reynolds favours a longer probationary period of up to nine months, arguing that it provides a reasonable balance between employee rights and business needs.
A British government source described the discussions as “intense”, adding that a deal in the next two weeks was still far from certain. “Angela is less keen on a longer probation period, and Reynolds thinks nine months is a reasonable period. It is not clear whether a deal will be reached,” the source said.
The discussions are taking place against a backdrop of growing discontent among business leaders, who argue that removing or significantly shortening probationary periods would deter hiring and stifle growth. Companies view probationary periods as essential to assessing new employees, and there are concerns that the changes could lead to a rise in costly and time-consuming unfair dismissal claims.
The proposed reforms, led by Rayner, form part of Labour’s election manifesto commitment to strengthening workers’ rights, including ending open-ended contracts, banning “fire and rehire” practices, raising the minimum wage, and strengthening the right to request flexible working and a four-day working week. Labour’s pledge aims to “make work profitable” and provide basic individual rights from day one, ending the current system that leaves workers waiting up to two years for unfair dismissal protection, parental leave and sick pay.
While Rayner and Reynolds have held joint meetings with chief executives, unions and lobby groups to explain the proposed reforms, business leaders have expressed significant concerns. A survey by the Confederation of British Industry found that 62% of members, including major companies such as AstraZeneca, Drax and PwC, believe the UK is becoming a less attractive place to do business and invest, with impending labour market reforms cited as the top concern.
The Institute of Directors’ economic confidence index, sometimes referred to as the “bosses’ union”, fell sharply from +7 in July to -12 in August, with recent news about employment rights cited as a major factor in the decline.
The rift between Rayner and Reynolds follows other internal divisions within the Labour government, including discontent over the decision to scrap the winter fuel allowance. Health Secretary Wes Streeting recently expressed his displeasure with the policy, underscoring broader tensions within the party as it balances reform ambitions with economic concerns.
This week is expected to be crucial to resolving the dispute as the government prepares to unveil its employment rights bill next month. Ministers have pledged to introduce the bill within their first 100 days in office, but sources say it remains “unclear” whether a deal on day one rights will be reached in time. “Getting[Chancellor]Rachel Reeves, Jonathan[Reynolds]and Angela[Rayner]in the same room is the point at which we can close it,” a Whitehall source said.
A government spokesperson stressed that economic growth and wealth creation remained the priority, adding: “Our plan to improve workers’ rights aims to help people get secure work and lead to a more productive workforce. That’s why we are working in close partnership with business and civil society to find the balance between improving workers’ rights and supporting the great companies that pay people’s wages.”
As Labour navigates these complex negotiations, the outcome will be closely watched by both employees and employers, with significant implications for the UK labour market and economic outlook.
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