Government backs down on “day one” dismissal rights

The government has announced that the qualifying period for employees to bring unfair dismissal claims will be reduced from 24 months to 6 months, rather than introducing a full “day one” right as previously proposed in the Employment Rights Bill.

This is a major U-turn, but the shift to a 6-month qualifying period appears to be a practical compromise: it improves protection for employees while preserving flexibility for employers. It should simplify hiring, especially for short-term roles. Employers will, however, need to manage probation effectively within the first six months.

The government also plans to “lift” the compensation cap for unfair dismissal but has not yet explained exactly what this will mean.

Initial period of employment

The new 6-month threshold raises questions about how it aligns with the Bill’s earlier proposal for a 9-month statutory probationary period (the “initial period of employment”), which now looks likely to be abandoned due to its complexity. Employers will instead need to ensure any contractual probationary periods are completed within 6 months once the law changes.

What is meant by ‘lifting the cap’ on compensation?

The current compensation cap for unfair dismissal is the lower of 52 weeks’ pay or £118,223. The government has suggested they may remove the 52-week pay cap, but the £118K cap will remain (uprated annually in line with inflation). This is still to be confirmed.

Other planned ‘day-one’ rights

Other day-one rights, such as paternity leave, unpaid parental leave, and statutory sick pay, are still going ahead as planned.

What’s next?

We’ll get more detail in December when the updated amendments are written. For now, the Bill is stuck because the House of Lords and the Commons cannot agree on several issues, including zero-hours contracts.

How employers can prepare

With these changes on the horizon, now is a good time for employers to review their probationary and dismissal policies. HR software like SafeHR can help streamline these processes, ensuring probation periods are tracked, contracts are compliant, and documentation is ready in case of disputes, helping businesses stay compliant and confident in their employment practices.