Unfair Dismissal

Policy

A key part of the Government’s Plan to Make Work Pay had included “day one” unfair dismissal rights. However, the Employment Rights Bill was stuck in ping-pong in its final stages and so on 27 November, the Government announced that it has reached an agreement with stakeholders and in order to continue to deliver on the rest of the Employment Rights Bill, it is no longer pursuing day one unfair dismissal rights. Instead, the announcement says that the Employment Rights Bill will reduce the  qualifying period for unfair dismissal from 2 years to 6 months.

While a less significant change to the law than originally anticipated, this will still have an impact on day-to-day HR processes including hiring, performance management and termination of employees with under two-years’ service.

The Government has announced that it will:

• make this change in primary legislation (which will make it more difficult for future Governments to alter the qualifying period); and
• “lift” the compensation cap for unfair dismissal. It is unclear if “lift” means the cap will be entirely removed, or if it will be increased or varied.

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Timing and developments

• Included in the Employment Rights Bill. The Government has promised to consult once the Employment Rights Bill has received Royal Assent.
• Following this, it may be the case that regulations will still need to be made, and guidance published, including an updated Acas Code of Practice – although we await details of the tabled amendments.
• According to the Government Roadmap, the measures will take effect in 2027, although whether the change in approach means that the Government will seek to bring this change into effect sooner awaits to be seen.