In a significant move, six of the UK's leading business organisations have jointly urged the House of Lords to pass the government's flagship Employment Rights Bill this week, despite holding reservations about key elements of the legislation.
A Call for Compromise Before Christmas
The groups, including the Confederation of British Industry (CBI) and the Federation of Small Businesses (FSB), wrote to Business Secretary Peter Kyle stating that 'now is the time' for Parliament to pass the Bill. Their plea comes as the legislation faces a parliamentary standoff between the Commons and the Lords, where ministers have suffered several defeats.
With Parliament set to shut down for Christmas later this week, the government has made a series of concessions to secure the Bill's passage. Notably, it has ditched a controversial 'day-one' right to protection against unfair dismissal, replacing it with a six-month qualifying period. It has also moved to scrap the existing compensation caps for unfair dismissal, which are currently set at the lower of 52 weeks' pay or £118,223.
Unresolved Issues and a Strategic Push
The business coalition had argued that the financial cap on compensation should be retained but increased to a higher sum. In their letter, they acknowledged that a compromise satisfying both unions and business on this point had not been reached. However, they stated their agreement to the cap's removal, noting it 'effectively removes the cap for all but the highest-paid workers'.
Their primary motivation for pushing the Bill through now is to lock in the six-month qualifying period for unfair dismissal, a measure they see as a positive outcome of negotiation. 'To avoid losing the six months qualifying period, we therefore believe that now is the time for Parliament to pass the Bill,' the letter stated.
The signatories to the letter were:
- The Confederation of British Industry (CBI)
- The British Chamber of Commerce
- The Chartered Institute of Personnel and Development (CIPD)
- The Federation of Small Businesses (FSB)
- The Recruitment and Employment Confederation
- Small Business Britain
Political Reactions and the Path Forward
The business groups warned that the proposed changes to compensation 'will exacerbate the challenges facing the tribunal system'. They also expressed concerns about other powers in the Bill related to guaranteed-hours contracts, industrial action thresholds, and measures for seasonal workers. Nonetheless, they expressed confidence that workable agreements could be found through secondary legislation.
Shadow Business Secretary Andrew Griffith criticised the move, stating, '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.'
In response, Business Secretary Peter Kyle emphasised the spirit of compromise, saying, 'All parties – business, trade unions, Government and Parliament – have made difficult but necessary compromises to bring this Bill forward.' He urged all sides to pass the Bill without further delay.
The legislation was considered by MPs on Monday and is scheduled to return to the House of Lords on Tuesday for its final stages.
