Labour defeated again on dreaded Unemployment Bill

The government suffered another humiliating defeat in the House of Lords on Monday as peers voted in favour of key Conservative-backed amendments to the so-called Employment Rights Bill.

The amendments, which Labour MPs had voted down in the Commons, are now back on the agenda thanks to cross-party support in the Lords.

The amendments would:

• Stop the introduction of ‘day-one rights' that would allow a new employee to start work at 9am and file a costly claim against their employer at 10am;
• Reverse Labour's plan to remove the 50 per cent turnout required for strike ballots, which would lead to widespread disruption;
• Stop Labour changing the rules to have union members' subscriptions used for party political campaigning without proper process;
• Provide protections for casual and seasonal workers, for whom variable working hours may be more convenient than a rigid timetable.

If it passes unamended, the Bill will make it £154 more expensive to employ a single person. The impact on the job market will be disastrous, with Conservative analysis showing a staggering 326,000 jobs could disappear, exacerbating the steady climb in unemployment since Labour took office.

This would build on the disastrous impact of Rachel Reeves' business tax hikes that have sent the cost per worker up by £800. As businesses hold their breath in the run-up to-Reeves' next Budget, the Conservatives stand as the only party with a plan to back businesses and deliver a stronger economy.

The Bill also threatens to lead to more strikes, with the new rules making it easier for militant activists to bring Britain to a standstill.

Andrew Griffith MP, Shadow Business and Trade Secretary, said:

“Labour's Unemployment Bill has provoked widespread alarm among industry leaders and across the political divide.

“This latest defeat for the government emphasises just how damaging the Bill could be for businesses and for the jobs market.  

“Labour should show some backbone, stand up to the trade union bully boys, back British businesses and compromise on this awful Bill.”

ENDS

Notes to Editors

Last night, the Conservatives insisted on their amendment to Labour's Unemployment Bill to protect businesses from the most burdensome and unworkable elements of the Bill, showing only the Conservatives will stand up for British business.

• Conservative peers voted to retain probationary periods for employers, enabling employers to hire with confidence and giving unemployed people a better chance at finding fulfilling work at a very difficult time for the labour market.

• The imposition of day one rights on businesses of all sizes up and down the country is unworkable, that is why Conservative peers voted to protect businesses from these damaging provisions.

• Conservative peers voted to allow businesses to continue to use probationary periods, protecting them from burdensome and unworkable duties.  200 Conservative peers, 58 Liberal Democrat peers, 33 Crossbench peers and 18 peers of other parties voted for Lord Sharpe of Epsom's successful amendment to retain probationary periods of 6 months, retaining flexibility for employers and helping them to grow with confidence (Lords Votes, Employment Rights Bill, Div. 2, 17 November 2025, link).

• Labour voted against Conservative amendments that would protect businesses from the harmful impact of day one employment rights and the chilling effect they will have on the job market.  135 Labour peers voted to insist on the Government's plan to impose day one employment rights on businesses across the country, weakening employers' ability to hire with confidence and imposing a chilling effect on the labour market (Lords Votes, Employment Rights Bill, Div. 2, 17 November 2025, link).

Labour voted to make it easier for unions to strike again:

Last night, Conservative peers insisted on their opposition to the Government's plans to make it easier for unions to strike, showing only the Conservatives will stand up to Labour's union paymasters.

• Labour peers voted against our Conservative amendment to retain the requirement that at least 50 per cent of eligible union members participate in strike ballots for a strike to be called.

• By voting against proper democratic thresholds to ensure unions have the backing of their members to go on strike, Labour risk unleashing more damaging strikes on British public services and the economy.

• Conservative peers voted to protect the country from more damaging strike action by retaining the 50 per cent participation threshold for successful strike ballots. 199 Conservative peers, 59 Liberal Democrat peers, 18 Crossbench peers and 19 peers of other parties voted to retain the existing strike ballot participation threshold, protecting the country from more costly and damaging strike action (Lords Votes, Employment Rights Bill, Div. 5, 17 November 2025, link).

• Labour voted against Conservative plans to retain the 50 per cent participation threshold for successful strike ballots. 134Labour peers voted against Lord Sharpe of Epsom's Conservative amendment to retain the 50 per cent participation threshold for union industrial action ballots, potentially unleashing many more days of strike action on Britain (Lords Votes, Employment Rights Bill, Div. 5, 17 November 2025, link).

House of Lords defeats Labour plan to impose automatic opt-ins for union political donations again:

Last night, the House of Lords insisted on their decision to overturn Labour plans to abolish the requirement to opt in to contribute to union political funds, further checking Labour's power grab for their union paymasters.

• A cross-party alliance of peers voted again to overturn Labour's abolition of opt-ins for union political donations which would see new trade union members automatically signed up for political donations which frequently go to the Labour Party.

• The Government's plans to make it easier for their union paymasters to raise cash from their members was rightly blocked again by peers from across the House of Lords.

• A cross-party alliance of peers voted to retain the opt-in approach to union political donations, protecting new union members from automatic enrolment in political donations which they may not support.  196 Conservative, 26 Crossbench, 60 Liberal Democrat and 20 peers from other political groups voted against Labour's plans to automatically enrol new union members into their respective political funds (Lords Votes, Employment Rights Bill, Div. 4, 17 November 2025, link).

• Labour voted to abolish the opt in system for union political donations, showing just how far they will go for their union paymasters. 127 Labour peers voted against Lord Burns' amendment to remove the Government's plans to automatically enrol new union members into their respective political funds from the Employment Rights Bill (Lords Votes, Employment Rights Bill, Div. 4, 17 November 2025, link).

Conservatives insist on amendments to protect British businesses that rely on seasonal workers, including farm businesses:

Last night, the Conservatives voted again to protect businesses that rely on seasonal workers from the most burdensome parts of Labour's Unemployment Bill, protecting farm businesses and other crucial sectors from unmanageable burdens.

• Conservative peers voted again to exempt seasonal workers from the most burdensome provisions of the Employment Rights Bill, protecting farm businesses, retail and hospitality and our tourism sectors from the worst of Labour's Unemployment Bill.

• In addition to the appalling Family Farm Tax and the sudden end of sustainable farming funding these unworkable burdens imposed by Labour will put the future of British farming at risk as well as threatening other sectors that rely on seasonal workers.

• Conservative peers voted to protect farmers, retail and hospitality businesses and our tourism sector from the most burdensome elements of Labour's Unemployment Bill.  199 Conservative peers, 61 Liberal Democrat peers, 20 Crossbench peers and 18 peers of other parties voted for Lord Sharpe of Epsom's amendment to exempt seasonal workers from the most damaging provisions of the Employment Rights Bill (Lords Votes, Employment Rights Bill, Div. 3, 17 November 2025, link).

• Labour peers voted against Conservative plans to protect farmers, retail and hospitality businesses and our tourism sector from the most burdensome elements of Labour's Unemployment Bill.  Labour peers voted against Lord Sharpe of Epsom's amendment to exempt seasonal workers from the most damaging provisions of the Employment Rights Bill (Lords Votes, Employment Rights Bill, Div. 3, 17 November 2025, link).

• The Bill will lead to 326,000 redundancies:
• According to the Institute of Directors (IoD), 23 per cent of employers will be more likely to make redundancies because of the Employment Rights Bill. This is a low-end estimate with a CIPD survey finding 30 per cent will make redundancies, a Federation of Small Business survey finding 32 per cent will and a Confederation of British Industry/Pertemps survey finding 27 per cent will (IoD, Press Release, 6 June 2025, link; CIPD, Report, April 2025, link; FSB, Press Release, 6 January 2025, link; Pertemps, October 2025, link)
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• According to the Department for Business and Trade, there are 1.418 million private sector employers in Britain in 2025 (DBT, Official Statistics, 2 October 2025, link).
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• Applying the IoD statistic that 23 per cent of employers will be more likely to make redundancies because of the Employment Rights Bill to business population statistics, there are 326,000 employers more likely to make redundancies because of the Employment Rights Bill.
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• Applying a low-end assumption that each business will make one employee redundant because of the Bill, we can assume that 326,000 individuals will be made redundant because of the Employment Rights Bill.

• The Employment Rights Bill will cost £154 per worker. The Department for Business and Trade's impact assessment of the Employment Rights Bill said that it could cost businesses up to £5 billion a year. There are 32,566,000 individuals aged 16 to 64 in work, therefore the average cost per worker is £154 (ONS, A01: Summary of labour market statistics, 12 August 2025, link; DBT, Employment Rights Bill: Economic analysis, October 2024, link). 

• According to the OBR, the cost of the National Insurance Jobs Tax is at least £800 per worker. The Economic and Fiscal Outlook which accompanied Autumn Budget 2024 said: ‘HMRC estimates that these measures combined will impact around 1.2 million employers from April 2025, with 250,000 employers gaining from the package, 940,000 losing out in net terms, and a further 820,000 employers seeing no change. This results in an average annual tax increase in excess of £800 per employee. The average employer who loses out will see their liabilities increase by around £26,000' (OBR, Economic and Fiscal Outlook, 30 October 2024, link).