Day one employment rights and unfair dismissal

Policy

One of the most significant reforms in the Government’s plans, the Employment Rights Bill makes provision for ‘day one employment rights’ for protection from unfair dismissal, statutory sick pay, parental leave and paternity leave as well as introducing a new statutory right to bereavement leave.

Unfair dismissal

The Employment Rights Bill removes the current two-year qualifying period for unfair dismissal, making it available from day one of employment. The qualifying period has been present in some form since unfair dismissal was introduced in the 1970s so this is a significant change in the law, which will have an impact on day-to-day HR processes including hiring, performance management and termination of employees with under two-years’ service.

However, the reforms contained in the Employment Rights Bill will allow employers to dismiss an employee using a ‘lighter touch’ process in certain circumstances during a probation period, to be called an ‘initial period of employment’ (‘IPE’). In respect of this:

• We don’t yet know what the ‘lighter touch’ process will require, as regulations will set out the detail on how the current test to assess the fairness of a dismissal will be modified for certain qualifying dismissals. The Next Steps document suggests that this process could involve, as a minimum, holding a meeting with the employee to explain performance concerns but does not expand with any further detail.
• The ‘lighter touch’ process will apply where (a) notice is given during the IPE, so long as notice expires no later than 3 months after the IPE ends and (b) the reason for the dismissal relates to the employee’s conduct, their capability or qualifications (including performance), their breach of a statutory duty or restriction, or some other substantial reason relating to the employee. This means that a dismissal for redundancy or for some other substantial reason not relating to the employee will require a full unfair dismissal process from day one of employment, even if it happens during the IPE.
• The Employment Rights Bill does not yet set out the duration of the IPE. The Government has stated a preference for the IPE to be a maximum of 9 months but has been under pressure from unions to cap the IPE at 6 months.
• The Employment Rights Bill provides that the ‘day one’ right to claim unfair dismissal does not apply where the employee has entered an employment contract but has not commenced their employment, save for in certain limited circumstances, such as where the reason for the termination of the contract is automatically unfair.
• A proposed Government amendment, agreed at Committee Stage, would allow for regulations to set a reduced cap on the compensatory award for unfair dismissal (the lower of 12 months’ pay or £115,115 – increasing to £118,223 from 6 April 2025) for employees dismissed during the IPE in circumstances where the ‘lighter touch’ dismissal process applies  – although details of this lower cap are not yet known.

Statutory Sick Pay 

The Employment Rights Bill will make the following changes to Statutory Sick Pay (‘SSP’):

• make SSP available from day one of absence, removing the three ‘waiting days’ before it becomes payable (as is currently the case);
• remove the lower earnings limit on eligibility (currently average pre-tax earnings of £123 per week); and
• set the rate of SSP payable to employees at the lower of: (i) 80% of the average weekly earnings; or (ii) the current weekly rate of SSP (currently £116.75 but increasing to £118.75 from 6 April 2025).

These changes will mean that low earners will become entitled to receive 80% of average weekly pay, where under the current law they are not entitled to SSP, and that SSP will be available for all employees from day one of sickness absence.

Paternity and parental leave

• The Employment Rights Bill will remove the requirement for employees to have completed a qualifying period of employment to be entitled to take statutory paternity leave and statutory parental leave, making them available from day one.
• This does not amend entitlements to statutory paternity pay, which will remain available only after 26 weeks of employment. Statutory parental leave will remain an unpaid right.
• However, the Next Steps document commits to consulting on the parental leave system which it says, “does not support working parents”. It is still not clear if the Government intends to consult just on the current unpaid right to take parental leave or is talking more generally about all types of parental/family leave (maternity, paternity, shared parental, adoption, etc) – for more details, see the Family friendly rights: parental leave system section.  

New right to bereavement leave

• The Government is introducing a new day one right to bereavement leave. For more details, see the Family friendly rights: bereavement leave section.

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Timing and developments

Unfair dismissal

• Included in the Employment Rights Bill. The Government promised previously that it will consult on certain aspects prior to implementation, including the length of the IPE, how the test of ‘fairness’ will be modified for qualifying dismissals during the IPE and the new compensation regime for such dismissals.
• Following this, regulations will need to be made and guidance published. There had been rumours that the changes being published to the Employment Rights Bill on 5 March 2025 would include details of the ‘lighter touch’ process and would indicate the Government’s intention to set the IPE at 9 months. However, these were not included in the Employment Rights Bill amendments and although the 9-month IPE was mentioned in an industry quote included in the Government’s press release of the amendments, details have not been made public.
• The Government has committed to the changes becoming effective no sooner than Autumn 2026.  

Statutory Sick Pay

• Included in the Employment Rights Bill. The Government launched a Consultation on 21 October 2024. A response to which was published on 4 March 2025, alongside amendments to the Employment Rights Bill making the change to the rate of SSP.

• This right could be brought into force by regulations soon after the Employment Rights Bill becomes law (so during 2025) rather than waiting until 2026 as indicated for most reforms in the Employment Rights Bill. However, firm details on timing have not yet been provided.

Paternity, parental, and bereavement leave:

• Included in the Employment Rights Bill. Regulations will be required in respect of details on bereavement leave (see the Family friendly rights: bereavement leave section).

• These rights are referred to as ‘immediate‘ changes in the Next Steps document – perhaps indicating that this is expected to be earlier in the Government’s implementation timeline than most reforms in the Employment Rights Bill, which are anticipated for no earlier than 2026.  However, firm details on timing have not yet been provided.