Labour's flagship law on workers' rights faces continuing deadlock after the House of Lords inflicted another defeat on the government.
The setback comes just two weeks after ministers said they had reached a compromise between businesses and unions on the right to claim unfair dismissal.
The government had argued the agreement would unblock the passage of the Employment Rights Bill and allow it to become law.
But peers have now backed a Conservative proposal to force a review of a Labour plan to abolish a cap on compensation in unfair dismissal cases.
The proposal to abolish the cap - which emerged from talks between unions and business groups two weeks ago - did not feature in Labour's manifesto, and is being added to the bill at an unusually late stage.
The bill is now due to return to the Commons on Monday, as the parliamentary process known as "ping-pong" continues until the two Houses agree.
Unions have accused peers of "defying the will of the British public" by holding up the bill, but Downing Street has insisted the government was still committed to passing it before Christmas.
The bill - which applies to England, Scotland and Wales, but not Northern Ireland where employment law is devolved - has been described by the government as the "biggest upgrade to rights at work for a generation".
It includes measures such as giving workers the right to sick pay and parental leave from their first day in a job, banning "exploitative" zero-hour contracts and strengthening...
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