In a significant shift, key business groups have thrown their weight behind the government's contentious Employment Rights Bill, following a breakthrough compromise on workers' rights to claim unfair dismissal from their first day in a job.
Industry Groups Call for Parliamentary Action
Six leading industry bodies have written a joint letter to Business Secretary Peter Kyle, declaring their support for parliamentarians to finally pass the long-debated legislation. The signatories include the British Chambers of Commerce, the Confederation of British Industry, the Recruitment and Employment Confederation, the Federation of Small Businesses, the Chartered Institute of Personnel and Development, and Small Business Britain.
This move increases pressure on crossbench peers and Conservative representatives to back the bill, ending months of legislative 'ping-pong' between the House of Lords and the House of Commons. The deadlock was partly caused by strong business opposition to the original proposal for day-one rights to sue for unfair dismissal.
Compromise Reached on Key Sticking Points
The government convened talks between union bosses and business executives to broker a deal on the most controversial element. While the business leaders' letter expresses support, it comes with a notable caveat. Industry figures stated they are "not satisfied" with the complete removal of the compensation cap for unfair dismissal claims, which currently stands at £118,223.
They have, however, pledged to "engage constructively" with the government on future workers' rights changes through consultations. The letter also acknowledges ongoing "concerns" about other powers within the bill but suggests that "workable arrangements" can be established regarding issues like guaranteed-hours contracts, strike action, and union membership.
Political Divisions and the Path Forward
Despite this business backing, the political battle is not over. The Conservative Party is expected to continue its opposition to the bill's progression. Last week, Tory peers joined with crossbenchers to oppose the removal of the compensation cap, sending the legislation back to the House of Commons for another debate on Monday, 15 December 2025.
In response to the industry letter, Business Secretary Peter Kyle praised the "good will and good faith" shown during negotiations. He stated, "The strategic compromises, made by both sides of industry, demonstrate that, with a spirit of consensus and cooperation, we can build a brand-new framework for industrial relations in our country."
Shadow Business Secretary Andrew Griffith criticised the move, arguing it was "clear" firms did not support scrapping the unfair dismissal cash cap. He claimed the change "only benefits high earners and will lead to fewer jobs," adding that every business leader he speaks to "remains concerned about the Unemployment Bill and its damaging impact on hiring."
