The government has announced it will amend the Employment Rights Bill (the Bill) so that employees gain ordinary unfair dismissal protection after six months’ service. This represents a significant shift from the current two-year qualifying period, while stopping short of introducing a day-one right. The government has also indicated that it intends to increase the cap on compensation for unfair dismissal.
Six-month qualifying period
Under the new proposal, employees will be able to bring a claim for ordinary unfair dismissal if their employer dismisses them after they have completed six months’ service. Automatically unfair dismissal claims, such as those relating to whistleblowing or health and safety, are not affected and will remain a day-one right.
A harder threshold to change in future
By setting the qualifying period in primary legislation, future governments would need to amend an Act of Parliament to change it. This may reduce the likelihood of frequent shifts in policy and provides employers with greater certainty compared with the current power to alter the qualifying period using secondary legislation.
Higher awards for unfair dismissal?
The press release announcing this compromise, which was agreed with employer representatives and trade unions, also indicated that the government would “lift the cap” on unfair dismissal compensation. At present, a tribunal may award the lower of 52 weeks’ pay or £118,223, whichever is lower. Subsequent reports suggest the announcement means that the Bill will remove the cap of 52 weeks’ pay but the overall monetary cap of £118,223 will remain. If implemented, this could increase potential awards for employees whose annual earnings fall below the monetary cap but whose losses exceed the previous 52-week limit.
A pre-Christmas Act?
Th government hopes that this compromise will allow the Bill to pass through both Houses of Parliament and receive Royal Assent before Christmas. The House of Lords may now withdraw the other proposed amendments it sought, including those relating to guaranteed hours for zero hours workers, given the agreement on unfair dismissal rights. However, the timetable remains subject to parliamentary progress. The Bill returns to the House of Commons on 8 December and the House of Lords will consider the amended Bill on 10 December.
What employers should consider now
The retention of a qualifying period means there will be no need for a statutory probationary period or “lighter touch” dismissal process during the first months of employment. However, with protection arising sooner, ensure managers monitor performance carefully and carry out probationary reviews consistently.
If the Bill receives Royal Assent before the end of the year, the government’s phased implementation timetable is likely to proceed more or less as originally envisaged. You can read more about the implementation plans in our previous blog post (here).
We will continue to provide updates on the legislation and what you should consider doing to prepare.
