The Employment Rights Bill and unfair dismissal as a day one right: what do we know so far?

The Employment Rights Bill ('the Bill') introduces unfair dismissal as a day one right. Although this will not come into force until Autumn 2026, this is one of the most significant changes in the Bill and one employers should be thinking about now.

Current position

Currently, employees usually need two years' service to claim unfair dismissal. There are some exceptions to this, including where a dismissal is 'automatically unfair' (for example, because it relates to whistleblowing or health and safety).

Compensation for unfair dismissal is currently capped at a basic award equivalent to statutory redundancy pay (of up to £21,000) and a compensatory award for loss of earnings (of up to £115,115 or 52 weeks' gross pay, whichever is lower).

It is common for employers to use contractual probationary periods to assess an employee's suitability for the role, and to allow for a shorter notice period for termination during the probationary period.

The Bill

The Bill removes the qualifying period so that ordinary unfair dismissal claims can be made from day one of employment. There had been some discussion about 'workers' gaining the right to claim unfair dismissal but, as currently drafted, the right will still be limited to employees.

The Government will consult on a proposed nine-month 'statutory probationary period' to allow for ‘a proper assessment of an employee’s suitability to a role’. During this period, it is proposed that there will be a 'lighter-touch' process allowing for fair dismissal, which will be subject to different standards of reasonableness. The Government has indicated that it will also consult on what a fair process will look like during the statutory probationary period, but the indication is that it might involve meeting the employee to discuss performance concerns, with the employee having a right to be accompanied.

The modifications will apply if:

• The termination date falls within the statutory probationary period, or notice of up to three months is given within the statutory probationary period; and
• The reason for dismissal is capability, conduct, statutory contravention or some other substantial reason relating to the employee. Redundancy is excluded meaning that the usual standards of reasonableness will apply to redundancy dismissals from day one of employment.

The Government will also consult on how the statutory probationary period will interact with the Acas Code of Practice on disciplinary and grievance procedures.

Existing automatically unfair dismissals (for which two years' service is not currently required) will not be impacted by the new statutory probation period.

The day one protection is not being extended to other rights relating to dismissal, therefore the two-year qualifying period for statutory redundancy pay will remain in place.

The Government is also considering whether to implement lower compensation limits for unfair dismissal during the statutory probationary period.

What will happen next?

The new day one right is not expected to come into force before Autumn 2026, so the current qualifying period will continue until then. We don't yet know whether the new right will only apply to those commencing employment after the regulations have come into force.

How can employers prepare?

Much of the detail is not yet known and will be contained in future regulations. However, in the meantime, it would be good practice for employers to:

• Review pre-employment processes to ensure the right candidates are recruited;
• Review induction and training programmes to ensure that new employees know the standards expected of them;
• Consider the current use of contractual probationary periods and how that might have to be reviewed in line with the new statutory probationary period;
• Evaluate how employees are managed during their probationary period, looking at the process for probationary reviews and performance management; and
• Plan ahead and consider what training may be required for managers on the new regime.

For more information about anything discussed in this blog, please contact a member of the Brodies Employment and Immigration Team. Workbox by Brodies subscribers can access practical and up-to-date content to support them in managing the evolving HR and employment law landscape: see our HR to-do list and the dedicated pages on unfair dismissal.