Ministers are considering allowing businesses to impose extended probation periods on people returning from long-term sickness in an attempt to encourage companies to hire them.
Whitehall sources said Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds were looking at allowing “flexible probation periods” as one potential lever to lessen the number of people on long-term sickness benefits.
Flexible probation periods are being discussed as part of an “array of options” for how to boost workers’ rights and encourage those who have been ill back into the workplace, a source said.
The idea is that a less rigid rule will encourage employers to take a chance on staff who have been out of work for a long time, without fear of being dragged into an employment tribunal if it did not work out.
The system would mirror a model in Ireland, where probation periods are not meant to exceed six months but can be extended to a year under exceptional circumstances, such as following a prolonged absence.
The discussions form part of efforts by ministers to work out how to hand workers full employment rights from “day one” in a job while also addressing concerns that far-reaching changes could put companies off hiring.
The key area of debate is around how probation periods will work under the new system. At the moment, people must be employed for at least two years to qualify for full employment rights, including the right to take companies to a tribunal for unfair dismissal.
Unions are expected to push back against the idea of an extended probation period for those returning from long-term sickness as they want day-one rights to apply to all.
“The length of time there is a probationary period is the next fight,” said one union source.
In a private meeting held by Ms Rayner and Mr Reynolds with unions and business groups on Tuesday afternoon, sources said one issue raised was “getting people who were long-term sick back into the workforce and finding a way to make it easier for them to get back in”.
Mr Reynolds promised a room full of business leaders at last week’s Labour Party Conference in Liverpool that he was “making sure better workers’ rights and reducing long-term sickness are consistent because, whatever the jargon, I need businesses to take people on to fix that problem.”
The Business Secretary said: “I need for them to trust that the Government understands that there is perhaps a bit more risk if people haven’t been in the labour market recently than there otherwise would be.”
Politicians are eager to encourage bosses to hire those who have been off work for a while, given that the number of workers on long-term sick leave is at a record high of 2.8m.
Sir Keir Starmer said last week that people who claimed long-term sickness benefits should be made to return to work “where they can”.
One business leader stressed that bosses “shouldn’t be punished” for taking a chance on workers who might need “a bit more training because they haven’t worked for a while”. That argument is understood to have been made to Mr Reynolds and Ms Rayner.
The two senior Cabinet members were in disagreement last month over how long the qualification period for full employment rights should be.
Conversations between Ms Rayner and Mr Reynolds about how probationary periods would work under the new system were understood to have been “intense”. Unions and businesses are divided on how far day-one rights should go.
Labour promised to overhaul workers’ rights within the first 100 days in government. The self-imposed deadline gives ministers one more week to reach an agreement.
Many business leaders expect more complicated rules, such as day-one workers’ rights, to only come into effect in 2026.
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