Labour’s flagship workers’ rights bill risks crippling the jobs market, the party’s “favourite” think tank has warned in a fresh challenge to Sir Keir Starmer.
The Resolution Foundation has told The Telegraph it would come out against plans championed by Angela Rayner, the former deputy prime minister, that will give workers a day one right against unfair dismissal.
It said the policy risked blighting the job prospects of millions of people while offering “little obvious gain to workers”.
It also warned that the new rule would “inhibit hiring”, risked plunging tribunal courts into crisis and would “only benefit employment lawyers”.
The foundation warned that the jobs market was already slowing down, with the number of employees on payrolls falling by 127,000 over the past year in the wake of increases to National Insurance.
It added that businesses were already going bust while being dragged through the courts for unfair dismissal claims. Almost 30,000 businesses have collapsed since Labour came to power, official figures show.
The Telegraph understands that ministers are unlikely to ditch the commitment to introduce unfair dismissal from day one as doing so would spark a backbench revolt.
Labour’s union backers – which will be handed sweeping new powers under the bill – have warned the Government not to water down the plans.