Labour will scrap plans to give people the right to “switch off” outside of working hours as a concession to business concern over new employment rights.

At risk of being accused of another Starmer u-turn, the government’s decision will satisfy employers who feel it was one benefit too far amid a package of measures that will strengthen employees’ powers in the workplace.

Trade unions have led calls to give workers a legal right not to be contacted outside their contract commitments.

While it is not in the Employment Rights bill going through parliament, there has been an expectation that Labour will introduce it.

It was expected to follow the law in France which agreed in 2017 to end the “always on” culture by making it illegal for employers to expect their workers to be contactable outside designated work hours in order to protect family and personal time.

Jonathan Reynolds, the UK Business Secretary, and Rachel Reeves, the Chancellor, have accepted that businesses are facing a number of added pressures, including increased costs and other regulations. The bill gives workers added added rights over unfair dismissal and paternity leave and will curtail zero hours contracts.

A government source told The Sunday Times: “The right to switch off is dead. We have to lower business compliance costs as much as possible.

“Growth that puts money in people’s pockets is the number-one priority of this government’s ‘plan for change’. That means making Britain the best country in the world in which to do business — and a key part of that is removing unnecessary barriers.”

Angela Rayner, the Deputy Prime Minister, who led Labour’s workers’ rights programme while in opposition, is said to have agreed to the change.

The Federation of Small Businesses warned in January that firms would curb recruitment and lay off workers unless further changes to the legislation were made.

The government is also expected to change probation periods to nine months rather than the six demanded by union leaders.

In an interview with Daily Business, Neil Carberry, chief executive of the Recruitment & Employment Confederation, says strengthening the rights of workers over unfair dismissal risks clogging up the tribunal system.

Mr Carberry says the skills system and labour market needs further reform to cut out paperwork and recognise the needs of both the employer as well as employee.

He has called for a review of the apprenticeship levy in Scotland, revealing that UK companies are sending their Scottish apprentices to England to train because it is easier for them to access funds through the system that operates south of the border.