Britain's leading business organisations have issued a stark warning to Conservative peers in the House of Lords, urging them to stop blocking the government's flagship workers' rights legislation. They fear that continued opposition could unravel a delicate compromise brokered between employers and trade union leaders.
The Race Against the Parliamentary Clock
With Parliament set to rise for the Christmas recess on Thursday, time is running out to pass the bill. Six of the country's most influential employer groups have written to Business Secretary Peter Kyle, stressing that failure to secure royal assent this week puts the entire agreement at risk. The signatories include the Confederation of British Industry (CBI), the British Chambers of Commerce, the Chartered Institute of Personnel and Development (CIPD), the Federation of Small Businesses, the Recruitment and Employment Confederation, and Small Business Britain.
In their letter, the coalition stated plainly: "Now is the time for parliament to pass the bill." The legislation has become a focal point for tension after Labour performed a significant U-turn on a key manifesto promise. The party initially pledged to grant workers protection from unfair dismissal from their first day in a job, but later compromised with union leaders on a six-month qualifying period, moving away from the current two-year rule.
The Sticking Point: Unlimited Compensation Claims
The bill's progress has been halted in the Lords, where Tory peers have voted it down four times. Their primary objection centres on a concession made to trade unions: the removal of the cap on compensation for unfair dismissal. Currently, payouts for ordinary unfair dismissal are limited to the lower of an employee's annual salary or £118,223.
This change has alarmed sectors with highly paid staff. TheCityUK, which represents banks and financial services firms, wrote to ministers expressing concern that its members were blindsided by the amendment. They warn it could create a pathway for highly paid bankers or executives to secure unlimited, windfall payouts if they successfully claim they were unfairly fired. The lobby group cautioned that this prospect could deter investment in the UK and make employers more hesitant about hiring.
Andrew Griffith, the shadow business secretary, echoed this sentiment, 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."
A Plea for Progress and Future Consultation
The business groups, while unhappy with the removal of the compensation cap, are advocating a pragmatic approach. They argue that the best way forward is to pass the primary legislation now and then focus on shaping the detailed rules through secondary legislation, where the government has pledged 26 consultations. Blocking the bill, they warn, jeopardises the spirit of cooperation between business, government, and unions and could see the six-month compromise on unfair dismissal lost entirely.
Peter Kyle responded by acknowledging the "difficult but necessary compromises" and assured that the government wants the consensus to continue during implementation. Ministers have vowed no further concessions in a bid to force the bill through before Christmas, even suggesting Parliament could sit for additional sessions.
The bill is expected to pass the Commons without amendment on Monday and return to the Lords on Tuesday. If peers insist on further changes, it will trigger more parliamentary 'ping-pong', potentially delaying it beyond the current session. The business groups' intervention highlights the high-stakes battle over the future of UK employment law, balancing worker protections with business competitiveness.
