The Employment Bill has landed: what does it say about unfair dismissal as a day one right?

The government has published its much-anticipated Employment Bill. It contains a raft of new changes which, once implemented, will give workers substantial new rights and employers additional new responsibilities. 

The Bill itself is huge: it runs to 158 pages and is accompanied by explanatory notes, which add a further 59 pages, a policy paper: Next Steps to Make Work Pay, a parliamentary statement, a government press release and other supporting documents. I stopped counting pages, not least because the prospect of having to read everything is daunting enough, without counting down how many more pages I have to go. 

There's too much in the Bill to do it justice in a single article. If you want to know what is included in broad terms, you can read our overview here.

Our plan is go through the detail of the Bill and send out separate bulletins on each specific topic. We are going to start by looking at changes to the qualifying period for unfair dismissal as that is the issue that appears to have caused most concern for our clients.

Unfair dismissal as a day one right

All employees will be able to bring a claim of unfair dismissal from the first day of their employment if they are unfairly dismissed. That was included as a manifesto pledge and the Labour government has kept its promise to legislate to make it a reality.

But, and it's a big BUT, you will be able to fairly dismiss an employee during their probationary period a bit more easily than you can do once they've successfully completed it unless you are making them redundant (more on that below). To achieve this, the Bill contains a clause which allows the government to modify s98(4) of the Employment Rights Act 1996 which is the section which deals with whether a dismissal was reasonable in all of the circumstances. We don't know exactly what procedure you will need to follow because that's going to set out in separate regulations which will only be finalised once the government has carried out a consultation.

We've had a few hints about what this might mean. The Secretary of State for Business and Trade told the Today programme yesterday, that he envisaged a “lighter touch” process and the policy paper: Next Steps to Make Work Pay says this - which only relates to capability dismissals: 

‘As a starting point, the government is inclined to suggest it should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or a colleague).’

That doesn't look too prescriptive, but we will have to wait and see what this ends up looking like and whether there will be different measures of fairness if the dismissal doesn't relate to poor performance. Those of you old enough to remember the statutory dispute resolution procedures will know that the procedure itself resulted in a raft of satelite litigation. Hopefully this government will learn the lessons of the past and won't repeat those mistakes. 

Probationary periods

The Bill doesn't actually refer to probationary periods. It uses the term ‘period of initial employment’ which means the same thing - but only for brand new employees. An existing employee who changes their job role whilst working for the same employer whose new contract includes a probationary clause won't be in their period of ‘initial employment’ unless they change roles in the first few months of their employment.

Provided you follow a yet to be determined fair and reasonable procedure, you will be able to dismiss an employee during their probationary period if their conduct is inappropriate, their ability lacking, they are subject to a statutory ban, or for some other substantial reason provided you serve notice to dismiss them before the end of their probationary period and their employment ends up to three months after the end of that period.

The Bill refers to an employer being able to fairly dismiss an employee whose ‘effective date of termination falls on or before the last day of the initial period of employment’, which suggests that you may, in some cases, be able to dismiss an employee without waiting for their probation period to end. That makes sense but we'll need more detail about that.   

Redundancy during probation 

Redundancy isn't included in the list of reasons you will be able to rely on to dismiss an employee during their probationary period. You will be able to make an employee redundant but you will need to make sure that you follow a fair procedure which should be the same for all affected staff - no matter how long they have worked for you. 

If you don't treat a probationer fairly before making them redundant, they will be able to bring an unfair dismissal claim. But, they will still need two years' service to receive a statutory redundancy payment. 

Existing day one rights

Employees already have the right to bring a claim for unfair dismissal, without needing two years' service if they are dismissed for a prohibited reason such as because their employer has found out they are pregnant, they have made a protected disclosure, or have taken part in trade union activities. This Bill won't change that.

However, the Bill does make it clear that employees won't be able to bring a claim for unfair dismissal under these new rules unless they have actually started work.

When will this come into effect?

Not until Autumn 2026 at the earliest. You will therefore have at least two years to prepare. 

The government intends to consult widely and says that it will take the time it needs to consider the best approach to take. It recognises that employers will need guidance to help them to understand and navigate the changes, and will need to consult with Acas to update and amend the statutory Code of Practice on discipline and grievances. 

Protecting their legacy

The Labour government has made this a permanent change. It will repeal s108 of the Employment Rights Act which sets out the current qualifying period. This means that a future government will not be able to re-introduce a qualifying period via a statutory instrument (which is a relatively quick and painless process). Instead, it will have to introduce primary legislation which is a different ball game and would take longer and be subject to a more rigorous process of scrutiny.

How to prepare

There are a few sensible steps that you can take now to prepare for this change. We'll be discussing these at our forthcoming webinar which takes place on Wednesday 13 November between 9.30am and 10.30am. If you'd like to join us, please register here. 

You can also take a listen to our new podcast which will drop next week. You can sign up and view of back-catalogue of hr podcasts here or listen on Spotify, Apple Podcasts and Captivate.FM. 

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