Employment Rights Bill: Government revises day-one unfair dismissal rights

Before considering yesterday’s announcement, it is important to remember however that there is already extensive protection from unfair dismissal from day one in many instances – for example, dismissals relating to whistleblowing, health and safety reasons and for trade union activity. These automatically unfair grounds for dismissal are unchanged as is the protection from discrimination from day one.

The Employment Rights Bill originally contained a provision to remove the current two-year qualifying period so that employees had a day-one right to protection from unfair dismissal. In addition, during the Initial Period of Employment (IPE) which was effectively a statutory probation period (the length of this had not been decided), employers would be able to make use of “a lighter-touch and less onerous approach” when carrying out dismissals.

Day-one unfair dismissal rights were controversial from the start and have been a significant area of dispute between the House of Commons and House of Lords over the past few months. This issue is one of the reasons for Royal Assent being delayed and for the current Parliamentary stalemate. See our recent article for more details of the Parliamentary ping-pong, Employment Rights Bill Royal Assent delayed.

A number of the Bill’s measures were due to take effect on 6 April 2026, such as the right to SSP and paternity leave from day one and the new Fair Work Agency being established. The Government was concerned that continued delays to Royal Assent could put at risk its implementation timeline. Hence its discussions with trade unions and business representatives.

The Government announcement also confirmed that:

• The unfair dismissal qualifying period can only be varied by primary legislation, which means an Act of Parliament would be necessary if there were to be any changes in the future to the qualifying period.
• The unfair dismissal “compensation cap will be lifted.” At this stage we do not know what this means – removed or raised or something else?

The next debate about the Bill is in the House of Commons on 8 December 2025. With this recent compromise about unfair dismissal rights, there is a chance that Royal Assent might be given before the Christmas recess. However, some tricky issues are still in dispute between the House of Commons and House of Lords, for example, regarding guaranteed hours contracts. It will be interesting to see how that issue is resolved.

For more details of the Government Roadmap and the phased approach to consultation and implementation of the Bill see our article Employment Right Bill roadmap published.