The government has U-turned on its manifesto commitment to offer all workers the right to claim unfair dismissal from their first day in a job.

Ministers now plan to introduce the right after six months instead, after business groups voiced concerns it would discourage firms from hiring.

The government argued it was making the climbdown to stop its employment legislation being delayed in the House of Lords, where it has run into opposition.

Other new day-one rights to sick pay and paternity leave will still go ahead, coming into effect in April 2026.

A source said most unions backed the changes, though Unite said the U-turn would “damage workers’ confidence”.

Business groups welcomed the announcement, which followed talks between major industry groups and unions.

In a statement, the six business groups involved in the discussions said companies would be “relieved” – but added firms still had “concerns about many of the powers” contained in the government’s employment package.

Currently, employers face additional legal hurdles if they want to sack employees who have been in their role continuously for two years.

They must identify a fair reason for dismissal – such as conduct or capability – and show that they acted reasonably and followed a fair process.

Labour had planned to abolish this qualifying period completely, alongside a new legal probation period, likely to have been nine months.

The promise was a central pledge in Labour’s manifesto ahead of last year’s general election, and a key plank of its Employment Rights Bill.

Labour pledged to create “basic rights from day one to parental leave, sick pay, and protection from unfair dismissal”.

But asked if it was a breach of the Labour manifesto, Business Secretary Peter Kyle said: “No.”

Instead, he argued the manifesto had pledged to “bring people together” and “that this would not be legislation that pits one side against another”.

Speaking to broadcasters, Kyle said the compromise had been found by “unions and the employers” and it was “not my job to stand in the way of that compromise”.

The government now plans to implement unfair dismissal protection after six months instead of day one, and ditch the new legal probation period.

In recent weeks, the House of Lords has twice voted in favour of a six-month period, slowing the legislation’s passage through Parliament.

The Fair Work Agency – a new body tasked with overseeing the new rights – will also be set up in 2026, the government announced.

There had been fears day one rights could overwhelm an employment tribunals system already facing huge backlogs.

One union source has told the BBC that the “vast majority of unions” present at discussions were comfortable with introducing unfair dismissal only after six months.

The Trades Union Congress (TUC) welcomed the news, adding the “absolute priority now is to get these rights – like day one sick pay – on the statute book so that working people can start benefitting from them from next April.”

TUC General Secretary Paul Nowak called on the House of Lords to “respect Labour’s manifesto mandate” and ensure the legislation was passed as soon as possible.

Kate Nicholls, chair of UK Hospitality, said: “This is a pragmatic change that addresses one of hospitality businesses key concerns.”

The six month waiting peroid would “give businesses much-needed breathing room and avoid further damage to employment opportunities,” she added.

Labour MP Andy McDonald branded the move a “complete betrayal” and vowed to push for its reversal.

“When Keir Starmer asked me to work with our trade unions to develop a programme for the biggest uplift in workers’ rights and protections in a generation, I did exactly as I was asked and we produced the New Deal for Working People,” he said.

But Unite the Union – a major Labour donor through the affiliation fees its members pay to the party – hit out at the U-turn, adding the employment bill was now a “shell of its former self”.

Unite general secretary Sharon Graham added: “These constant row backs will only damage workers’ confidence that the protections promised will be worth the wait. Labour needs to keep its promises.”

The Conservatives called the U-turn “humiliating” but added that the legislation was “still not fit-for-purpose”.

“Keir Starmer must grow a backbone, stand up to his union paymasters and ditch every single job-destroying anti-growth measure in the employment rights bill now,” added shadow business secretary Andrew Griffith.