Employment Rights Bill

The Employment Rights Bill will remove entirely the current qualification period for unfair dismissal.

With a few exceptions, an employee cannot currently claim unfair dismissal until they have accrued two years’ service.

The Bill will remove this two-year qualifying period entirely. Employees (not the wider category of workers) will have the right to claim unfair dismissal from the first day of their employment. Note that the right to bring an unfair dismissal claim will not be extended to someone who is dismissed before they have started work, i.e. where an accepted offer of employment is withdrawn before they’ve started work – unless the reason for the dismissal falls within a number of prescribed reasons. These are exceptions for ‘automatic’ unfair dismissal where the reason for dismissal is matters such as union membership, whistleblowing or asserting a statutory right etc.

There is to be a consultation on a new statutory probationary period (what the Bill calls an ‘initial period of employment’). During this period the test for a fair dismissal will be modified to allow employers to terminate employment more easily. There are however two important limitations to note:

1. The modified test will only apply where the reason for dismissal is capability, conduct, illegality or some other substantial reason (SOSR) ‘relating to the employee’. It will not apply to redundancy dismissals during the probationary period, and nor does it seem to apply to SOSR dismissals which do not relate the employee. Where the dismissal is by reason of redundancy (or SOSR which does not relate to the employee), the existing reasonableness test will apply i.e. that the employer has acted reasonably in treating the reason as sufficient to dismiss, viewed in light of the size and resources of the employer.
2. The modified test will only apply where the dismissal takes effect on or before the last day of the initial period of employment, or where the employer gives notice to terminate before the end of the initial period of employment and the dismissal takes effect within three months of the end of the that period.

Both the nature of this modification and the meaning of initial period of employment are to be dealt with in regulations. The government favours a 9-month period. An amendment to the Bill states that this initial period of employment will be between 3 and 9 months. The government envisages a ‘lighter touch process’ consisting 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 union representative or colleague. There will also be consultation as to the compensation regime that would apply in such circumstances, and how this all interacts with the ACAS code.

The above reforms will not come into force before autumn 2026.