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Companies will be able to keep new recruits on probation for up to nine months in a last-minute concession by the UK government to businesses ahead of legislation this week shaking up employment laws.
Ministers are planning to consult for several months on whether the new probation period should have a maximum length of six months or nine months, according to Labour officials.
But the government is already minded to opt for nine months, in what is a victory for business groups over unions on the eve of ministers publishing the biggest package of employment reforms for a generation.
Sir Keir Starmer’s promise to give employees protection from unfair dismissal from the first day in a job was one of the most contentious elements of sweeping employment reforms pledged at the election.
The subject is sensitive because trade unions believe allowing companies to keep new staff on probation undermines Labour’s election manifesto promise to give all workers “full rights from day one” when they are hired.
“The government has a clear view that businesses need time to assess new hires, and we think that probation period should be nine months,” said a Labour official. “In practice it means firms can dismiss new hires more quickly than staff who have been employed for more than nine months, while still honouring our commitment to day one rights.”
Government figures are braced for a backlash from the unions. “We know the decision won’t be popular with everyone, but we are clear that this is a Labour government working in partnership with business and workers,” they said.
The abrupt change in policy comes two weeks after the Financial Times reported that business secretary Jonathan Reynolds had privately agreed on six months with deputy prime minister Angela Rayner, despite her previously arguing for a much shorter period.
Reynolds later told the Guardian newspaper that the government’s legislation would mean a probation period of roughly six months in most cases.
But people familiar with the matter said the shift in position had come after intense lobbying from business leaders in favour of a longer period.
The government has held several meetings with union leaders and business representatives in recent weeks in a push to find compromise over some of the more contentious policies in the package, billed as “the plan to make work pay”.
Chancellor Rachel Reeves, who argued for the probation to be as long as 12 months, was pivotal in the discussions. Many business leaders had hoped for the threshold to be at least a year.
Labour’s promise to introduce basic individual rights from day one for all workers will mean an existing two-year qualifying period for protection against some forms of unfair dismissal, and a one-year wait for parental leave, are scrapped.
The government will say in the legislation that workers will now obtain “day one rights” on employment including entitlement to paternity leave and unpaid parental leave, as well as some protection from unfair dismissal.
However, the test for unfair dismissal will be less stringent in the probation period, with employers still able to let go of staff through a “lighter touch” process.
Probation periods, which typically last between three and six months, play no part in UK employment law at present.
Employers have argued that the new regime will require them to introduce much more rigorous processes to ensure any decision to dismiss a new hire stands up to scrutiny in the event of an employment tribunal.
The full details will be the subject of a consultation, which could push implementation of day one rights to 2026 or beyond.