HR Hub

The government has agreed to abandon Day 1 unfair dismissal rights and, instead, have a six-month qualifying period (down from the current 2-year period).

This has come about because of negotiations between union and employer groups in an effort to unblock the stalemate which has been delaying the final approval of the Employment Rights Bill. The House of Lords has been insisting on certain amendments to the Bill, and the House of Commons has consistently rejected them. One of the sticking points was the granting of unfair dismissal rights from the first day of employment.

This change will be done by primary legislation, not the existing powers to vary the qualifying period in the Employment Rights Act 1996 – which means a future government won’t be able to change it easily, at least not without primary legislation.

Timings are not confirmed. The original plan was for the Day 1 right to come into force in April 2027. Perhaps the new 6-month right will come in earlier? Watch this space.

It remains to be seen whether this concession by the government will be enough for the Lords to drop its remaining objections to the Bill (centred on zero hours contracts and certain aspects of trade union law reform). The Bill returns to the Commons on 8^th December and then must go back to the Lords.

However, the press release announcing this change also states that ‘the compensation cap will be lifted’. It’s not known for sure what this means. One possibility is that the current cap of about £118,223 will remain but will be available to anyone whose losses justify that award even if their salary is below that, i.e. removing the 52-week limit but retaining the upper cap. Until the amendments are published, we’ll not know for sure.