The Labour Party is facing an enormous row over plans to introduce extreme workers reforms, which businesses have already warned could do “real damage” to the economy.

Angela Rayner is reportedly in a row with Business Secretary Jonathan Reynolds about the hard-left reforms, with fears from less left-wing members of the government they could put companies off hiring.

Labour’s manifesto committed to a “new deal for working people”, which would include rights to flexible working, ban zero-hours contracts, and fire and rehire.

The row has been sparked by Ms Rayner pushing to guarantee all workers the same rights from day one, including parental leave, sick pay and protection from unfair dismissal.

Businesses are already warning of the cost and regulator burden the bill will create, with one source recently telling the Times that the Bill is like “using a sledgehammer to crack a nut”.

Ms Rayner wants to clobber small businesses with red tape (Image: Getty)

A row has now broken out between Ms Rayner and Mr Reynolds, about when these employment rights should apply to a worker.

The Deputy Prime Minister, one of the few left-wingers still at Sir Keir’s top table, is pushing to have the rights guaranteed from day one of working, regardless of whether the employee is working a probation period.

This could include the right to take their companies to an employment tribunal for unfair dismissal, a right currently reserved for those who have worked somewhere for two years.

Meanwhile, the Business Secretary is pushing for a nine-month wait before workers get some additional rights, while he also reportedly wants a probation period of a year before someone can take their employer to a tribunal for unfair dismissal.

A Whitehall source told the Telegraph: “Day one rights is proving very difficult.

Mr Reynolds is reportedly clashing with Ms Rayner over the plans (Image: Getty)

“Angela is less keen on a longer probation period, Reynolds thinks nine months is reasonable. It’s unclear if an agreement will be reached.”

More awkwardly for the Government, Sir Keir promised that the landmark workers’ rights reforms would be passed within Labour’s first 100 days in Government.

With Sir Keir now on his 73rd day in the top job, this gives his team less than a month to iron out the fundamental differences between Ms Rayner and Mr Reynolds.

A Labour source has stressed that the two ministers are “close friends” and their disagreements are “not acrimonious”.

Businesses are worried about the plans, which they say amount to a ban on probation periods.

Martin McTague, the national chairman of the Federation of Small Businesses, said the changes will hit smaller companies the hardest, who employ around 60% of Britain’s workforce.

He said: “The biggest harms will come from ramping up risk and cost when weighing up who and whether to recruit. Formal dismissal process from day one would add to your risk and could cause real damage to the economy.”

“Anyone looking at sky-high economic inactivity and not thinking about how small employers recruit is thinking about the problem in the wrong way.”

The FSB is asking the government to reconsider its position on day one rights, as well as exempt firms with fewer than 250 employees.