Six leading business organisations have urged the government to press ahead with the Employment Rights Bill, warning that further delays risk undermining hard-won compromises reached with ministers and trade unions.
In a joint letter sent on Monday (15 December) to secretary of state for business and trade Peter Kyle, the British Chambers of Commerce, Chartered Institute of Personnel and Development, Confederation of British Industry, Federation of Small Businesses, Recruitment and Employment Confederation and Small Business Britain said Parliament should now pass the bill to avoid losing key concessions already agreed .
The intervention comes as the flagship legislation remains locked in parliamentary ‘ping-pong’, following last week’s House of Lords vote to back an amendment requiring a review of plans to abolish the cap on compensation in ordinary unfair dismissal cases.
In their letter, the business groups welcomed the government’s decision to move away from day-one unfair dismissal rights and instead introduce a six-month qualifying period, describing the agreement as the product of “meaningful, good-faith dialogue” that would be easier for employers to manage.
However, they reiterated concerns about changes to the unfair dismissal compensation regime, warning that removing the cash cap on awards could raise unrealistic expectations, slow dispute resolution and place further strain on an already overstretched tribunal system. While the groups confirmed they had agreed to the removal of the 52-week cap on compensation, they said no compromise had been reached on retaining a financial limit.
“Taken together, these proposed changes will impact how the compensation system works and will exacerbate the challenges facing the tribunal system,” the letter said, adding that businesses were relying on continued tripartite talks and secondary legislation to resolve outstanding issues.
Responding the same day, Peter Kyle backed the call for Parliament to approve the bill without further delay, saying both employers and workers needed certainty and clarity . He praised business groups and trade unions for the compromises already made and urged MPs and peers to show similar leadership.
“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,” Kyle said, adding that the government remained committed to extensive consultation on implementation and secondary legislation.
Since the exchange of letters, the parliamentary deadlock has continued. On Monday, the House of Commons formally disagreed with the House of Lords’ amendments, sending the bill back to the upper chamber. Peers are today considering the Commons’ amendments and the government’s reasons for rejecting the Lords’ changes, keeping the bill’s pre-Christmas timetable in doubt.
Retail and small business groups have repeatedly warned that unresolved elements of the bill – including unfair dismissal compensation, guaranteed-hours contracts and union rules – could increase costs and reduce flexibility for retailers already operating under tight margins.
Ministers, however, continue to argue that the legislation represents the biggest upgrade to workers’ rights in a generation and insist that remaining concerns can be addressed through consultation once the bill secures Royal Assent.