Insights into the new Employment Rights Bill: Making unfair dismissal a day one right

At a glance

• The Employment Rights Bill 2024 (Bill) will remove the two-year qualifying period for unfair dismissal, making it a day one right for all employees.
• Employers can use a statutory probation period with a more flexible dismissal process for capability, conduct, illegality, or other substantial reasons, but not redundancy.
• The government will consult on the length and conditions of the probation period and the dismissal procedure during this time.
• Existing day one rights for unfair dismissal protection remain unaffected, and the right to statutory redundancy payment still requires a two-year qualifying period.
• Changes will take effect in Autumn 2026, requiring employers to adjust recruitment, contracts, induction processes, and performance management practices.

The Employment Rights Bill 2024 (Bill), which had its first reading on 10 October, will transform the employment law landscape. In the first of a series of articles focussing on specific measures in the wide-ranging Bill, we start by looking at the impact of the removal of the qualifying period for unfair dismissal.

Since the right to claim unfair dismissal came into existence in 1971, there has always been a qualifying period of employment, ranging from six months to two years depending on the government of the day. Currently, to bring a claim for unfair dismissal, an employee needs to have two years’ continuous service with their employer. The Bill will remove that requirement, making the right not to be unfairly dismissed a day one right for all employees.

However, it is proposed that employers will be able to make use of a statutory probation period during which there will be some flexibility to dismiss. During this period (referred to in the Bill as the ‘initial period of employment’), employees will still have the right to claim unfair dismissal, but the process to be followed would potentially be more ‘light touch’. This will only apply to dismissals for capability, conduct, illegality or some other substantial reason relating to the employee, but not redundancy.

The government is proposing to consult on the length of the probation period, the conditions which will apply to it, and the procedure that the employer will need to follow to dismiss during the probation period. As a starting point, the government is inclined to suggest the process should consist of holding a meeting with the employee to explain the concerns (at which the employee could choose to be accompanied by a trade union representative or a colleague). The government will consult extensively, including on how the probation process interacts with the ACAS Code of Practice on Disciplinary and Grievance procedures.

No matter what procedure is specified by regulations to apply to dismissals during the probation period, employers may need to go further to avoid liability. The burden of proof will be on the employer to establish the reason for dismissal, and without an adequate investigation a tribunal may not be satisfied that the employer has established it genuinely believed on sufficient grounds that the employee had committed misconduct or was not performing.

The ‘Next Steps’ document which the government published alongside the Bill states that 'the statutory probation period will set out a new balance for the early months of a job – providing new legally binding rights for employees from day one, whilst also delivering a lighter-touch and less onerous approach for businesses to follow to dismiss someone who is not right for the job'.

The government also intends to consult on the compensation regime for successful claims during the probation period, with consideration given to tribunals not being able to award the full compensatory damages for dismissals during the probation period.

Existing day one rights that provide protection from unfair dismissal will not be affected by the statutory probation period (ie automatically unfair dismissals for reasons such as health and safety).

It will still be possible to dismiss for redundancy during the probation period, but normal unfair dismissal rules will apply rather than the modified process.

The right to claim unfair dismissal will continue to apply to employees only. The government will consult separately on moving to a single worker status.

The right to a statutory redundancy payment will continue to be subject to a two-year qualifying period.

What will the impact be in practice?

A lot will depend on the detail, but it is clear even now that this will require some big changes to how employers deal with new hires. The two-year qualifying period has been in place since 2012. Prior to that it had been one year since 1999. Employers have been able to take a very light touch approach to performance management at the start of a new hire’s job for a substantial period of time. That will have to change, or employers may face more expensive and time-consuming litigation.

Once the detail becomes clear, employers will need to:

• review recruitment practices to minimise the risk of hiring someone who is not the right ‘fit’;
• put in place new contracts or policies which reflect the requirements of the statutory probation period;
• review induction processes to ensure new employees know what is expected of them;
• consider clearly defined performance metrics for different roles so that it is evident when employees are under-performing;
• train managers on how to manage new employees pro-actively throughout the probationary period and document any concerns; and
• ensure that reminders are set in advance of probation periods ending so that notice can be given to terminate, if necessary, in good time.

The changes to unfair dismissal will not come into effect until Autumn 2026, and it is not yet clear whether they will have any retrospective effect for new employees hired prior to that date (which is unlikely but cannot be ruled out at this stage).

Although the removal of the qualifying period will undoubtedly lead to a higher volume of claims, it is possible that it may lead to a reduction in the more complex and expensive whistleblowing and / or discrimination claims which many employees bring if they do not qualify for unfair dismissal due to lack of service.

You can read our overview of the Bill here.