The Employment Rights Bill, unveiled by Labour in October 2024, contains a number of significant changes to employment law, including the right to claim unfair dismissal from day one of employment. But what does this change mean for employers and how will it be implemented?
The law around Unfair dismissal law is set for a shake-up with the introduction of the Employment Rights Bill. Unsurprisingly, this has provoked a great deal of discussion, although much of the detail of the legislation is yet to be finalised. This leaves many questions unanswered about what the reforms will look like in practice.
The Bill aims to fulfil Labour's intention of delivering "the biggest upgrade to rights at work for a generation". However, the government has confirmed changes will not come into effect until autumn 2026.
We look at what we know about the reforms so far and what employers can expect to happen next.
How will unfair dismissal rights change?
The current law (with some limited exceptions) requires employees to have had two years of continuous service before they are eligible to claim unfair dismissal.
With the new 'day one' rights, this requirement is no longer applicable and employees will be able to claim unfair dismissal from the outset of their employment. The government says this is to: “reassure employees they have rights from day one... giving more people the confidence to re-enter the job market or change careers, improving their living standards”.
Alongside this change, a new statutory probation period will be introduced (known as the 'Initial Period of Employment' or IPE), which the government says is intended to “allow for proper assessment of an employee's suitability to a role... enabling businesses to take chances on hires”.
During this time, it will be easier for employers to dismiss someone following fair procedures than it would be after the probation period expires. This will apply to dismissals for conduct, capability, illegality or ‘some other substantial reason’ but not redundancy.
We don’t know yet how this statutory probationary period will work, however. Details to be confirmed include how long the probationary period will last and how exactly the right to claim unfair dismissal will be qualified during this period.
How will day one unfair dismissal rights impact employers?
Unfair dismissal law to date has provided employers with a period of time to dismiss somebody at the beginning of their employment (with exceptions in certain cases). The right to claim unfair dismissal from day one will make the process more risky for employers.
While it will protect employees against dismissal for frivolous reasons, it's likely to lead to more disputes. It may also potentially have a knock-on effect on employers’ (especially smaller employers) willingness to hire, although the statutory probation period is being introduced to address this.
We will not know the full impact on employers, however, until the details on the rules for this probationary period are finalised.
Next steps – consultation on changes to unfair dismissal
The Employment Rights Bill has only just been introduced to parliament and the government has stated that changes will not come into force until autumn 2026.
Before then, there will be a consultation period to address the reforms within the Bill, including the changes to unfair dismissal.
This consultation will cover questions such as:
- How long will the new statutory probation period last?
This is likely to be between six and twelve months, with the government favouring nine months as a potential compromise.
- What will be the process for fair dismissal during the probationary period?
The government has suggested this should include 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 consultation is also likely to cover compensatory awards for dismissal within a probation period, which may be limited.
What should employers do to prepare for unfair dismissal changes?
The current unfair dismissal law will remain until legislation is passed following consultation on the new statutory probation period. This means the two-year qualifying period is still applicable for the time being.
Our employment team will be keeping a close eye on the progress of the consultations and providing further updates on what you should do to prepare for changes to legislation. Areas to consider include:
- Reviewing hiring and management practices in preparation for the changes.
- Ensuring robust processes and documentation are in place for assessing employee performance and handling dismissals.
In the meantime, please do contact us if you have any questions about the Employment Rights Bill and how this could impact your business.
How we can help
For expert legal support on employment law changes and how they affect your business, contact the specialist employment team at Tozers. Our experienced solicitors provide practical solutions whatever your legal questions.
