Left-wing think tanks are urging the Labor Party to amend the Employment Rights Bill

Monday 27 October 2025 11:29
| Updated:

Monday 27 October 2025 11:30

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A left-leaning economic think tank that once housed finance ministers has called for major changes to the Labor Party’s flagship Employment Rights Bill as a final demand before workers’ rights are written into law.

The Foundation’s resolution, previously led by Budget expert Torsten Bell, had called for changes to ‘day one entitlements’, a key policy opposed by business leaders and prominent researchers.

In its latest report, researchers at the think tank warned the government that it risks “going from one extreme to the other” when it comes to workers’ rights and that the proposals must be changed immediately.

Currently, the 300-page bill would give dismissed employees the right to sue employers for unfair dismissal from the first day of work, rather than after the current two-year period.

The Resolution Foundation has joined leading industry groups in calling for these reforms to be watered down as it says companies will refuse to hire more staff because of the risks and additional costs.

It said that the eligible period for unfair dismissal cases should be reduced to three or six months, as per international norms, rather than one day.

Controversial employment rights reforms

The call from the think tank comes as amendments to the Employment Rights Bill are due to be considered in the House of Lords, which have reached the final stage.

Labour’s new business minister, Peter Kyle, is adamant the bill will be passed in full without changes by the end of the year.

His strong statement at the Labor Party conference last month came after suggestions some reforms would be rolled back following Angela Rayner’s departure from government.

In a speech last week, Rayner, who championed the bill’s progress, said the new workers’ rights would be a “game changer for millions of people trapped in insecure, low-paid jobs.”

But Ruth Curtice, chief executive of the Resolution Foundation, said the new ‘day one’ rights could undermine efforts to protect low-income workers and job opportunities in the UK economy.

“In one aspect, the UK risks moving from one extreme to the other – by ending the qualifying period for unfair dismissal protection.

“Introducing a new legal probationary period at the same time as this is a messy compromise that risks making it harder for companies to recruit, confusing workers, and only benefiting employment lawyers.”

Labor gap from Resolution Foundation

The think tank’s report is the latest example of a split between the Resolution Foundation and the Labor government over policy direction.

The Resolution Foundation also joined business groups in warning the government against implementing a national living wage for everyone over 18, and not for those over 21.

The report warns that employment for graduates and young people will worsen if the government chooses to increase costs for employers as they are forced to increase wages by seven per cent.

“Recent government policies may have worsened employment opportunities for young people,” the think tank said last week.

“The pattern of job losses in low-paid sectors, where young workers are concentrated, is consistent with the adverse impact of large increases in minimum wage levels, combined with increases in employer National Insurance contributions (NICs), over the past year.”