Important Update on Day One Unfair Dismissal Rights
Alan Kitto
One of the major provisions within the Government’s Employment Rights Bill was the removal of the qualifying period for unfair dismissal cases, and in so doing, give employees a day one right to bring such claims.
The House of Lords has repeatedly rejected this provision in its readings of the new draft legislation, favouring instead a reduction in the current two year qualifying period, to a six month qualifying period.
In an attempt to get their Employment Rights Bill passed before the Christmas recess, yesterday evening the government acquiesced and agreed to scrap their original plan and will instead accept the recommendation for a six months qualifying period.
The change isn’t being made using the existing powers in the Employment Rights Act 1996 to vary the qualifying period. Instead, the government is using primary legislation, which means a future administration can’t simply reverse it with the usual secondary powers. Any later amendment would also require primary legislation — a significantly bigger hurdle.
The press have reported that the government are hoping to implement this change in 2026 and not now in 2027; employment law typically changes in April or October.
As part of the announcement, the Department for Business and Trade’s press release says the government will “lift the compensation cap”. But that phrasing is generous and vague.
It could mean one of two things:
The entire cap is being removed, making unfair dismissal awards unlimited (similar to discrimination and whistleblowing awards).
Or the government may only be removing one of the two caps — either the annual salary limit or the overall cap of £118,223 — while keeping the other.
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