Day one rights to unfair dismissal are among the more controversial proposals set out in the Employment Rights Bill.
Given that the Government has specifically stated in its Implementation Roadmap (the Roadmap) that this right won't take effect until 2027employers will have time to get to grips with the revised right and the potential implications. 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 current two year qualifying period will be swept away under the Bill and the right not to be unfairly dismissed will be in place from day one of employment. Will it be a true day one right though? The Bill allows employers to operate probationary periods during which employees can be dismissed more easily for performance after following a "lighter-touch" process. The Government has committed to consulting on the length of the statutory probation period – its preference is for a period of 9 months (up from the rumoured 6 months). The Government has published a 'Fact Sheet: Unfair Dismissal in the Employment Rights Bill' in which it refers to the establishment of a "statutory probationary period" as a tool "to ensure that employers retain the ability to ensure that the job is a good fit for both the employee and the employer". According to the Roadmap consultation on the mechanics of the probationary period will take place during the summer/autumn of 2025.
Interestingly the Bill was amended during its passage through the House of Lords to insert a six-month qualifying period for an unfair dismissal claim. The rationale behind this is to enable employers to have sufficient time to assess new employees without amounting to a "disincentive to hire". It was pointed out by the government during the debate on the amendment that day one rights to unfair dismissal were a manifesto promise and the Lords amendment would prevent this.
It remains to be seen if the day one right will be reinserted. It's likely that the Lords will give way on any non-governmental amendments due to the Salisbury Convention. This implements the constitutional tradition that the Lords will not block government bills that seek to implement manifesto commitments. In the meantime watch this space!
The probationary period
So what will the "lighter-touch" process constitute? The Government states in its 'Next Steps to Make Work Pay' document that, as a starting point, it is inclined to suggest that it should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or a colleague). The Government will consult extensively on the new right, including on how it interacts with Acas's Code of Practice on disciplinary and grievance procedures, and on the detail of the compensation regime for successful claims during the probationary period.
There is a provision in the Bill for the Government to make regulations which specify the steps that an employer has to take in order for the dismissal of the employee to be treated as fair.
It's worth noting that there's nothing to stop an employer from running a separate contractual probationary period of any length it chooses as well as to choose what non-statutory entitlements the employee can access during that period. For example, notice can still be longer after completion of probation, provided notice always is at least equal to the statutory minimum notice periods.
Will the probationary period apply to everyone?
There are some exceptions to the probationary period process. In order to dismiss an employee during this period fairly the employer will have to show that the reason for the dismissal is conduct, capability, a statutory bar, or some other substantial reason "relating to the employee". There are two points to note here: redundancy dismissals are excluded and so unfair dismissal will be a genuine day one right in those circumstances (though the two year qualifying period for a statutory redundancy payment will remain in place); and a substantial reason "relating to the employee" means that this will be limited to the individual employee concerned and not related to business-wide reasons such as a restructure. There is a provision in the Bill for the government to make regulations determining whether a reason does or does not relate to an employee so there may be more clarity on this in future.
Employees who have been recruited but have not yet started work will not be covered by the unfair dismissal protections, although there are various exceptions to this rule which allow employees to claim that they've been unfairly dismissed even before starting work. In the first two instances, where the dismissal is automatically unfair, or it relates to the employee's political opinions or affiliation, the law will not change. The third instance, where dismissal is for a spent conviction (this protection will only be gained once the employee has entered into the employment contract and won't apply if they are not recruited because of a spent conviction), is something new.
Written reasons for dismissal
Currently there is a two-year qualifying period for the right to written reasons for dismissal on request. Under the new law employees will qualify for this right once the statutory probationary period (and up to three further months of notice as long as the notice was given during their probationary period) has concluded.
Practical points
Although it's a while until the new law comes in, and there is considerable detail still required on the processes that an employer will have to follow, there are a few general things to bear in mind:
- 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.
- Actively manage employees during the statutory probationary period so that any problems can be addressed during this period and the "lighter-touch" process can be followed.
- You can operate a separate contractual probationary period but be aware that it's only during the statutory probationary period that the fair dismissal provisions will apply.
- If you don't already have a probation period, consider introducing one so managers get used to managing probation effectively.
- If you don't already have a probation period, consider introducing one so managers get used to managing probation effectively.
- Invest time in training managers to engage with the process and deal with it confidently.
- Although employees who have been recruited but have not yet started work will not be covered by the new unfair dismissal protections, be aware that there are exceptions to this rule.
