Employment Rights Bill Update - Day One Unfair Dismissal Rights Abandoned
Last week, the Government agreed to abandon plans to implement unfair dismissal rights from day one. Instead, there will be a six-month qualifying period.
It has also been reported that the change may now come into force in 2026, rather than 2027 – because there’s now no need for consultation and secondary legislation. However, this is yet to be confirmed.
The Employment Rights Bill had been stuck in a deadlock between the House of Lords and the House of Commons, but this compromise by the Government now means that progress can be made.
Currently, claimants must have a minimum of two-years’ service before a claim can be submitted for unfair dismissal. So, a reduction to just six months still represents a greatly improved level of protection to employees, but the House of Lords' stance is that it’s more reasonable for employers – allowing for a buffer period to determine an employee’s suitability. It’s worth noting that all existing day one rights – whistleblowing and discrimination, remain unaffected.
Given that making unfair dismissal a day one right was a specific Labour manifesto commitment, this is a fairly huge U-turn. However, once in place, the 6-month period will be made under primary legislation – which means it would be a lot harder for a future Government to change.
In their announcement last week, Government also said that ‘the compensation cap will be lifted’ which has come as something of a surprise, as it hasn’t featured in the earlier drafts of the Employment Rights Bill. The press release was ambiguous, and hopefully we’ll have more clarity in the coming weeks. Currently, the cap on unfair dismissal compensation is set at 52 weeks’ salary or £118,223.00 (whichever is the lower).
Other contentious issues, such as guaranteed hours for zero hours contracts still remain. Speculation from legal experts suggests that as we’ve now seen this significant backing down by the Government, the House of Lords may be more likely to concede on these other points.
The next parliamentary debate is set for Monday 8th December, so watch this space for further developments.