Out of all the changes to employment law proposed by the Employment Rights Bill, the number one concern for employers is the likely impact of the changes to unfair dismissal qualification. The Bill will see a day-one right for all employees to be protected against unfair dismissal, and will see the current requirement for employees to have two years’ service before they can bring an unfair dismissal claim, save in limited cases, disappear. As the ‘two-year rule’ is engrained within HR and employment lawyers alike, adjustments will be needed.
The change will mean that an employee, regardless of length of service, will be able to bring an unfair dismissal claim against their employer unless: they are dismissed during an initial period of employment; a “light touch” procedure is followed; and the reason for dismissal is capability, conduct, illegality or some other substantial reason relating to the employee.
Employers are understandably concerned. This could lead to a significant increase in employment tribunal claims, and exposure to large compensation awards when dismissing an employee with short service.
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There are still several unknowns in relation to the proposals. For example, the required light touch procedure that a business will be required to follow is still to be set out.
Additionally, the length of the period of initial employment still needs to be confirmed. The current thinking is that it will be set at nine months.
While there are these unknowns, and with an implementation date of autumn 2026, employers could be forgiven for putting this towards the bottom of the to-do list until more information is known. However, this lead in time does give employers the opportunity to start to review practices now, and embed new processes so that when the provision is in force, the organisation is already used to operating within the new framework.
A key area of focus for employers should be the proper use of probationary periods. The proposed initial period of employment that would, for example, see an employer being able to dismiss an employee on performance grounds without facing an unfair dismissal claim, is very similar to a probationary period. As such, employers who ensure that probationary periods are used effectively will find it easier to adjust to a day-one right for unfair dismissal protection.
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Employers should look at:
a) ensuring probationary periods are made clear to employees at the outset, and included in the contract of employment;
b) the diarising of probationary periods so that a formal end of probation period review takes place, rather than passing without any formal acknowledgement of pass or fail, which is a common issue;
c) encouraging performance issues to be discussed with the employee throughout the probationary period, so that the employee is fully aware of areas of concern;
d) training managers in how to conduct effective probation reviews, and introducing a consistent process in the event that a decision is made to end the employment, including effective communication of that decision and providing written reasons.
Matt Jenkin is a partner in the employment team at Herrington Carmichael LLP
This article was published in the May/June 2025 edition of HR magazine.
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