In a significant policy reversal, the Government has abandoned its manifesto commitment to introduce day-one protection against unfair dismissal. Instead, employees will gain the right to claim unfair dismissal after six months of service, rather than from their first day of employment.
The U-turn explained
The Employment Rights Bill has been the subject of intense debate in Parliament, caught in a stand-off between peers and MPs over several contentious provisions. To ensure the legislation’s passage, ministers have now agreed to introduce unfair dismissal protection after a six-month qualifying period, down from the current requirement of 24 months.
This compromise represents a substantial shift from Labour’s election manifesto, which explicitly promised “protection from unfair dismissal” as a day-one right. The Department for Business and Trade has framed the change as a pragmatic step that will still “benefit millions of working people who will gain new rights and offer business and employers much-needed clarity.”
Despite this U-turn, other significant reforms in the Bill remain on track for implementation from next April, including day-one protection for sick pay, enhanced parental leave rights, measures to ban “exploitative” zero hours contracts, and restrictions on fire and rehire practices and the launching of the Fair Work Agency.
What this means for employers
Key practical implications
Under the new framework, employers will have a six-month window to assess new hires before they gain full unfair dismissal protection. This is substantially shorter than the current 24-month period but provides more breathing room than the originally proposed day-one rights.
During the first six months, employers should still follow good practice and fair procedures when considering dismissal. While the threshold will be lower in the future, employments tribunals will still expect fair, reasonable and documented decision-making processes, when dismissing an employee(s).
Strengthened protections
The government has committed to two important safeguards:
- Any future changes to the six-month qualifying period will require primary legislation, meaning it cannot be altered through secondary legislation or ministerial order (making it harder for future governments to increase the qualifying period); and
- The statutory compensation cap for successful unfair dismissal claims will be lifted (the finer details of this have not yet been provided, so it is not currently clear what the government intends).
Business reaction
The business community has welcomed this modification. Representative bodies had consistently raised concerns that day-one protections would increase employment costs and discourage hiring, particularly for small and medium-sized enterprises attempting to correct recruitment mistakes without facing lengthy tribunal proceedings.
However, the government faces criticism from opposition parties and some employment rights advocates who view the change as a retreat from promised worker protections.
Planning ahead
While the Employment Rights Bill will not come into full effect until 2026 (date to be confirmed), employers should begin preparing now for the transition to a six-month qualifying period. This includes:
- Reviewing and updating probationary procedures:
- Ensuring robust documentation practices from day one of employment:
- Training line managers on the new law and fair dismissal procedures for all employees (including those with less than six months’ service):
- Considering how recruitment and onboarding processes might need to adapt; and
- Reviewing employment contracts and handbooks to reflect the forthcoming changes.
It remains unclear whether the new rules will apply retrospectively to employees hired before the legislation takes effect, though this appears unlikely.
Comment
The Employment Rights Bill represents the most significant overhaul of employment law in over 50 years. Even with this U-turn, the changes will require careful planning and implementation across all business sectors.
At Nelsons, our employment law specialists are closely monitoring these developments and can provide tailored advice on how the reforms will affect your organisation. Whether you need assistance updating policies and procedures, training managers, or navigating specific dismissal situations, we’re here to help ensure you remain compliant as these changes take effect.
How can we help?
Rachel Hatton is a Partner in our expert Employment Law team.
Rachel has a strong reputation in all aspects of employment law, both advising employers generally on how to deal with employees in the workplace (covering disciplinary and grievance matters, redundancy, TUPE etc) together with extensive Employment Tribunal litigation experience covering complex discrimination, whistleblowing and dismissal claims and also has particular experience in developing HR support services for businesses.
For expert guidance on preparing your business for the new employment law landscape, please call 0800 024 1976 or contact us via our our online enquiry form.
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