Day-One Right for Unfair Dismissal

The Employment Rights Bill 2024 is currently receiving a lot of press coverage. It is also receiving more than its fair share of scare stories.

To calm this down and remove the noise, we would like to point out that any changes will not become law until autumn/winter 2026 - at the earliest.

As part of the process, the government will allow businesses of all sizes to have their say and help shape the practical aspects of implementation.

 

Current Unfair Dismissal Law
Under the current law employees must have two years of continuous employment with the employer before they can bring a claim for unfair dismissal. The reason for dismissal must relate to one of the five accepted potentially fair reasons: capability, conduct, redundancy, statutory restriction, or some other substantial reason. Dismissal connected to maternity, whistleblowing, etc., is automatically unfair.

 

Removing Two Year Period
The proposed removal of the current two-year period does not necessarily mean employees will have a day-one right.

The Bill refers to an “initial period of employment” – think of this as a statutory probation period. The length of this term will be subject to consultation between the government and business before it becomes law. However, the government is said to favour an initial period of nine months.

During this nine-month period, there will be a simplified and less onerous process for dismissing employees – the current five potentially fair reasons and the current exceptions regarding maternity and whistleblowing will remain.

(Where an employee is dismissed due to redundancy, the current redundancy rules will probably still apply.)

Compensation for unfair dismissal during the “initial period” is also expected to be less.

If the “initial period” is nine months, employers may want to reduce their probation periods accordingly. If an employee’s probation period is less than nine months, it would allow employers to end their employment within the “initial period” – and so using the simplified process.

 

Conclusion
The government has already suffered a backlash from businesses regarding the first budget. The Labour government could potentially win back some goodwill by simplifying employment law. We would argue that complex employment law regulations are a significant cost to business and a barrier to recruitment. Making unfair dismissal laws straightforward would significantly help businesses of all sizes. This is sorely needed.