Understanding the changes in the Bill
The newly introduced Employment Rights Bill (Bill) proposes significant reforms to the UK's employment law framework. A key change is the repeal of the two-year qualifying period for protection from unfair dismissal under section 108 of the Employment Rights Act 1996. Instead, the Bill introduces new provisions under section 108A, granting unfair dismissal protection from day one of employment. This marks a substantial shift in employees' rights across the UK.
These protections will apply to employees only, although the government intends to consult on the introduction of a single "worker" status in future. If the single worker status is implemented in future, this is likely to mean that employers will not be able to sidestep day 1 unfair dismissal rights by engaging workers rather than employees.
Balancing security and flexibility with a statutory probationary period
While the Bill introduces day-one protection, it also contemplates a statutory probationary period, which it calls an "Initial Period of Employment" (IPE), the duration of which will be defined in accompanying regulations. The government has indicated a preference for a nine-month IPE, but this is yet to be confirmed pending further consultation.
During the IPE, a more streamlined process for dismissals is anticipated. Employers may be able to dismiss employees using a "light touch" procedure, which could involve a meeting where concerns are explained, and the employee has the right to be accompanied. However, the exact requirements and interplay with the Acas Code of Practice are still to be defined in the forthcoming regulations.
Crucially, the lighter process will not be available for all dismissals. It is expected to apply only where the principal reason for dismissal relates to the employee’s capability, conduct, illegality, or another substantial reason directly connected to the employee (not including redundancy or restructuring under SOSR). This narrower scope suggests that employers will need to carefully document and justify dismissal decisions even during the IPE. Effective management of new starters during probationary periods will become increasingly important, as the probationary review process is likely to provide essential evidence of the reason for dismissal during the IPE. Employers should ensure that their review procedures are thorough, transparent, and well-documented, allowing them to demonstrate that any dismissal decisions are fair, reasonable, and compliant with the new requirements.
The new section 108A also clarifies that employees cannot claim ordinary unfair dismissal if they have not started work by the effective date of termination (EDT). However, there are exceptions, such as claims involving automatically unfair reasons, including dismissals linked to political opinions or affiliations, or for a spent conviction.
Finally, the Government's 'Next Steps' document mentions that the question of compensation will be considered during consultation. This raises the possibility of a more limited financial liability for dismissals to which the light touch procedure applies.
Future consultation and implementation
The Bill sets the stage for further consultation, with key areas for feedback including the length of the IPE and the specific procedures for dismissals during this period. The government has confirmed that these changes will not take effect until at least autumn 2026, following the consultation process and the finalisation of accompanying regulations. Whilst implementation details are yet to be confirmed, this extended timeline is likely to effectively create a phased transition, where the qualifying period for unfair dismissal will shorten incrementally. For instance, employees hired now will gain unfair dismissal protection after roughly two years of service, while those recruited a year from now will obtain the same rights after about one year. Employers should monitor developments closely to ensure they are prepared for the new requirements once they come into force.
There is also the matter of how these new rights will operate for employees on assignment contracts. The Bill refers to regulations allowing multiple periods of continuous employment to be treated as a single period, potentially smoothing over short-term engagements. However, the practical implications remain unclear, particularly for platform-based work arrangements. This could prove complex for employers in the gig economy who rely on short-term contracts.
Preparing for the changes
The shift to day-one unfair dismissal rights represents one of the most significant changes to employment law in decades, providing greater job security from the outset of employment. To align with these new rules, employers will need to rethink their onboarding and probation management strategies, ensuring that robust and transparent procedures are in place. The introduction of the IPE gives employers time to assess new hires, but it will also bring greater scrutiny to dismissal practices during this period. Reviewing and updating existing dismissal practices, employment contracts, and probation policies will be essential to stay compliant and avoid disputes once the regulations are finalised.