Day one rights to unfair dismissal were among the more controversial proposals set out in the Employment Rights Bill.
The Government stated in its Implementation Roadmap (the Roadmap) that this right wouldn't take effect until 2027, but this is now all subject to change. With news that the day one right is due to be converted into a right with a six-month qualification period there's also news that as the right won't need detailed consultation it may well come in in 2026 rather than 2027.
Currently the two-year qualifying period remains in place, unless the dismissal is automatically unfair, or it relates to the employee's political beliefs or affiliation.
A day one right?
The original plan was for the current two-year qualifying period to be swept away under the Bill and the right not to be unfairly dismissed was going to be in place from day one of employment. The Bill allows employers to operate probationary periods during which employees can be dismissed more easily for performance after following a "lighter-touch" process. As the day one right will become a six-month qualification period, the proposed statutory probationary period, and the consultation to thrash out the detail of the way in which this period will operate, will be dropped.
Day one rights to unfair dismissal have been a major sticking point and the House of Lords have persisted in insisting on a six-month qualification period. This has led to a fairly extensive game of Parliamentary ping pong! The Government's announcement that day one unfair dismissal rights will now be dropped from the Bill may lead to Royal Assent before Christmas, but it's not guaranteed.
The Bill is due back in the House of Commons on Monday 8th December and then is scheduled to return to the Lords for consideration of the Commons' amendments on the 10th of December so watch this space!
The probationary period
Whilst employers won't be having to contend with a statutory "lighter-touch" dismissal process as initially thought, a six month qualification period for the right to claim unfair dismissal will definitely place probationary periods in the spot light. It will be important to deal effectively with any issues which may arise during this period to minimise the risk of unfair dismissal claims further down the line.
The compensatory award
Currently the compensatory award for an unfair dismissal claim is based on a statutory cap (at the moment this is £188,233 but it gets uprated every year) or 52 weeks' salary, whichever is the lower amount.
Before the government's amendments to the Bill were published on 5 December it had been thought that the cap of 52 weeks' pay would be removed, but that the statutory cap would be retained. However, the government is proposing to remove the cap on compensatory awards altogether! This is a major change, but one over which it seems there has been no agreement. It will be interesting to see what the Lords has to say about this measure when it comes to consider the amendments to the Bill on 10 December.
Written reasons for dismissal
Currently there is a two-year qualifying period for the right to written reasons for dismissal on request. Presumably, under the new law, employees will qualify for this right after completing six-months' service.
Practical points
Whilst implementation is still some time away (likely 2026 rather than 2027), there are several steps HR teams should take now:
- Pay attention to your recruitment processes to ensure that unsuitable candidates for the role on offer are weeded out to avoid problems down the line.
- If you don't already have a probation period, consider introducing one so that managers get used to managing probation effectively.
- Actively manage employees during the probationary period so that any problems can be addressed during this time and before six months' service has been reached.
- Invest time in training managers to deal with the probationary period confidently and to handle performance issues effectively within the six-month window.
