Employment Rights Bill: unfair dismissal, a day-one right

November 6, 2024

As part of our series of updates exploring the implications of the Employment Rights Bill (the Bill), we look at one of the most significant changes to be proposed in the Bill - the repealing of the two-year qualifying period (Qualifying Period) under section 108 of the Employment Rights Act 1996 (subject, in some cases, to a statutory probation period). You can see our previous blog on this here: blog.

Currently, subject to certain exceptions, employers are free to dismiss an employee within the first two years of employment without a potentially fair reason for dismissal and without following any sort of process. This has essentially meant that employees have been on a two-year probation period. One of the main advantages of including a contractual probation period in the contract has been to allow both parties to terminate the employment relationship on shorter notice during that period (it is standard practice for a shorter notice period (usually one week) to apply during the probation period). The proposed change, if enacted, would give greater meaning to probation periods and provide employees with some form of job security as soon as they pass it.

The government has stated in its Factsheet: Unfair Dismissal in the Employment Rights Bill that "reforms of unfair dismissal will take effect no sooner than autumn 2026" - at which point, unfair dismissal protection would become a day-one right (meaning that the Qualifying Period will be repealed). This would also apply to the right to written reasons for dismissal which will apply from the end of the statutory probation period.

The government has stated that it recognises the importance of ensuring that jobs are a good fit for both the employer and the employee, so the repealing of the Qualifying Period will be subject (in the case of capability, conduct, illegality and some other substantial reason dismissals) to a new statutory probation period, referred to as the "initial period of employment" during which employers will be able to dismiss employees following a "light touch" process. The government has suggested that this should consist of a meeting with the employee in question to explain the employer's concerns and that the employee will have the right to be accompanied.

It is anticipated that this "light touch" approach will not apply to redundancy dismissals for which the usual process will need to be followed from day one (although the right to a redundancy payment will continue to be subject to the employee having acquired two years' service).

Though the government will consult on the length of the probation period, it has suggested a nine-month probation period. Employers would not be prevented from setting longer probation periods but the "light touch" approach would only apply during the statutory period, meaning that any increase in the length of contractual probation periods would not be effective in extending the period for employers to apply this "light touch" approach.

So, what would this all mean in practice?

Going forward, if the Bill becomes law as drafted, employers:

• should introduce more rigorous interview processes to ensure the people they employ are the right fit (although they will need to be careful not to make it too hard and time-consuming to recruit);
• will need to ensure that new recruits receive more thorough training to ensure they know what they are doing;
• will need to ensure that processes are put in place throughout the probation period to make it easier for managers to decide whether to pass their subordinates' probation periods; and
• will need to train managers on both the "light touch" approach (as well as the usual, more thorough dismissal processes, if employees are dismissed after they have passed the statutory probation period).

This is not the first time that the Qualifying Period for unfair dismissal has been amended, having been most recently increased from one year back up to two years (as it had been previously) in 2012, and it seems likely that we will see a rise in employment tribunal claims as a result. The fact that the government is due to consult on the level of compensation to be awarded for successful unfair dismissal claims for dismissals that take place during the statutory probation period may go some way to curbing this increase in claims.

As the above proposals are contained in the Bill, they may be subject to change as it makes its way through the parliamentary process. We will, of course, be keeping a close eye on the progress of the Bill in relation to this momentous proposal and keep our readers posted on any updates, so watch this space.

Current position	Position under the Bill
Two-year Qualifying Period necessary for unfair dismissal claims (except for some automatic unfair dismissal claims).	Two-year Qualifying Period will be repealed (subject to a statutory probation period for capability, conduct, illegality and some other substantial reason dismissals).

You can read our overview of all the key measures in the Bill here.