In a surprise move the government announced last night that they are no longer seeking to make ordinary unfair dismissal a day one right, instead there will be a six-month qualifying period – a development likely to be welcomed by many businesses as a more sensible and workable compromise.
As you will remember, the government has been having difficulty getting its proposed day one ordinary unfair dismissal rights past the House of Lords – with them twice voting for a six-month qualifying period. However, the government’s announcement comes with a bit of a sting in the tail for businesses with the press release stating that the “compensation cap” will be lifted, it’s not fully clear what is meant by this, but it seems unfair dismissals could become more costly for some.
So, in brief what else does your business need to know about the latest developments?
- Why the change?
- What happens next?
- Keep up to date with developments
Why the change?
As you will remember, the government had planned to introduce a day one right to ordinary unfair dismissal – subject to a statutory probationary period for new starters, likely nine months, during which businesses could use an unexplained ‘light touch process’ to dismiss in most cases. The government convened talks between major industry bodies and trade unions, and the change was based on the outcome of those discussions with the government accepting a straightforward six-month qualifying period for ordinary unfair dismissal.
The development is set against a backdrop where businesses have been understandably expressing concerns about the impact of the change to ordinary unfair dismissal rights, particularly in relation to hiring plans. Concerns have also been raised about the impact day one ordinary unfair dismissal rights could have on an already struggling employment tribunal system. As mentioned earlier, the government had also hit difficulties in getting its unfair dismissal changes passed, which was one of the areas holding up the Employment Rights Bill’s (ERB) passage into law.
The government has said they now wish to move forward to ensure the ERB can reach Royal Assent and keep to their published delivery timeline – this will be important with some new rights in the ERB such as a day one right to paternity leave and changes to sick pay planned for April 2026.
What happens next?
The ERB will still need to be agreed and there is no mention in the government’s press release about other areas of contention such as guaranteed hours for low/zero hours workers, but the unfair dismissal qualifying period was a key sticking point so it may now be that agreement between the Commons and the Lords on the ERB can be reached sooner rather than later.
Keep up to date with developments
It will be important for businesses to keep up to date with developments as things can move fast. We will be keeping a close eye on the ERB so look out for further Legal Updates on this and other HR developments.
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