Business groups provide update on Employment Rights Bill

Joint statement on behalf of:

• British Chambers of Commerce
• Chartered Institute of Personnel and Development
• Confederation of British Industry
• Federation of Small Businesses
• Recruitment and Employment Confederation
• Small Business Britain

Business organisations are clear that there remain concerns about many of the powers contained in the Employment Rights Bill. However, in order to secure the 6-month qualifying period for unfair dismissal, and to progress further negotiations on the bill in secondary legislation, we believe it should now be passed. We have today exchanged correspondence with the Secretary of State for the Department of Business and Trade setting this position out (copied below).

We are pleased the Government has agreed to move forward with tripartite discussions on other key elements of secondary legislation as there remain many areas where compromise will need to be found to get the Bill into a workable state.

Letter to Secretary of State for Business and Trade

Dear Secretary of State,

We were pleased to take part in the constructive discussions with the government and trade unions that led to the agreement on a six-month qualifying period for unfair dismissal. This outcome came from meaningful, good-faith dialogue that enabled us to reach a consensus that represented a significant step forward which will have a positive impact on growth and opportunities.

For the members we represent, working within an existing framework of qualification periods will make the change to unfair dismissal easier to manage. Government can help make this change a success by supporting employers to ensure they all have robust policies and practices in place. This will allow the 6-month qualifying period to be used effectively to surface any issues of performance or behaviours.

We continue to believe that the structure of the compensation regime for unfair dismissal claims is important for both employers and employees. It helps manage unrealistic expectations about claim values, supports quicker dispute resolution, and reduces pressure on an already overstretched tribunal system.

We confirm our position in agreeing to the removal of the 52-week cap on claims for compensation for unfair dismissal, as this change effectively removes the cap for all but the highest-paid workers. Unfortunately, we have not been able to reach a compromise that satisfies both the unions’ request for removal of the cash cap and our position of retaining it while raising the overall limit.

Taken together, these proposed changes will impact how the compensation system works and will exacerbate the challenges facing the tribunal system. The government’s commitment to undertake a review into the Dispute Resolution System is welcome and we will engage constructively in that process.

On the Bill more broadly, we believe that the best way forward is to keep working with the government and trade unions to find balanced solutions through secondary legislation. To avoid losing the 6 months qualifying period, we therefore believe that now is the time for Parliament to pass the Bill.

Businesses still have concerns about several other powers in the Bill, but we are confident that workable agreements can be found in due course under a tripartite model. These include issues related to guaranteed-hours contracts, seasonal and temporary workers, thresholds for industrial action, and the practical application of union rules.

We urge the government to affirm its continued commitment to an ongoing tripartite process. This will ensure that the secondary legislation of the Bill is implemented in the spirit of seeking consensus through compromise which has helped achieve the meaningful progress to date.

Sincerely,

British Chambers of Commerce

Chartered Institute of Personnel and Development

Confederation of British Industry

Federation of Small Businesses

Recruitment and Employment Confederation

Small Business Britain

Response from Secretary of State for Business and Trade

Dear Business Representatives,

Thank you for your letter urging Parliament to now pass the Employment Rights Bill. I am grateful for the leadership business and trade unions have shown in our efforts to create a fair and flexible labour market. 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. And I look forward to working with the representatives of both business and trade unions to bring that about.

Your call for Parliament to now pass the Employment Rights Bill is absolutely right. Business needs certainty and clarity about the details and support for implementation of the new arrangements, just as working people need the certainty of job security and fair reward central to Make Work Pay. Making progress on the agreed road map for consultation and implementation of the Bill is vital to achieving the certainty both sides of industry demand. The leadership that you and the trade unions have shown in recent weeks, coming together to overcome the last significant hurdle on unfair dismissal, points the way. Parliament should now show similar leadership by passing the Employment Rights Bill without further delay to end the uncertainty and insecurity for both employees and employers.

Compromise and consensus are important components of successful industrial relations. The best negotiators on all sides understand they are essential to progressing beyond the ‘winner takes all’, zero-sum game approach, that only leads to discord, dispute, and long[1]term decline. All parties – business, trade unions, Government and Parliament – have made difficult but necessary compromises to bring this Bill forward. In that same spirit of compromise, during the remaining stages of this Bill I urge everyone to recognise that the elected representatives of business, trade unions and the people are committed to passing this Bill without further delay.

If we can make progress towards achieving Royal Assent, I can assure your members, and the trade unions, that we are keen to see the spirit of consensus and cooperation shown to date continue in its implementation. As we have said throughout the passage of the Bill, we are committed to extensive consultation on its detailed implementation and in secondary legislation. I note that the business representation organisations continue to have concerns in a number of areas, including on the compensation system for unfair dismissal in employment tribunals. I want the good will and good faith shown during these recent rounds of negotiations to continue and for us to make further progress in partnership with both business and the trade unions. I am, therefore, very happy to confirm that we will continue this approach to ensure that implementation can be harmonious, sensible and sensitive to the needs and perspectives of both sides of industry.

Finally, may I take this opportunity to wish you and your members, along with every working family in our country, a very merry Christmas and a prosperous and productive New Year. I am certain that the spirit of courage, cooperation and consensus, that has been so clear during these recent few weeks, will be the basis for even greater progress in 2026.

Yours sincerely

Rt Hon Peter Kyle MP

Secretary of State for the Department for Business and Trade

President of the Board of Trade