The Employment Rights Bill (ER Bill) which has wide-ranging and fundamental reforms of Employment Law was introduced to Parliament on 10 October 2024 which is the first phase of the Government delivering the ‘Plan to Make Work Pay’. These reforms will take effect no sooner than autumn 2026.
The ER Bill proposes reforms to many areas of employment law, but this article will focus on day-one unfair dismissal rights and what this might look like.
Currently, employees must have two years of qualifying service before having the right to bring an unfair dismissal claim, unless they are able to bring a claim of automatic unfair dismissal on one of the statutory grounds, e.g. whistleblowing.
Under the ER Bill, unfair dismissal will become a day-one right, meaning the current qualification period for bringing unfair dismissal claims will be removed. However, there are also proposed changes which will allow employers to dismiss employees more easily at the start of their employment.
The ER Bill includes the potential for introducing statutory probation periods or the ‘initial period of employment’, as it is referred to under the ER Bill. The proposal is that the ‘initial period of employment’ will last for the first nine months of employment (the Government’s current preferred duration) and during this period, the standard of reasonableness for dismissal will be modified and employers will be able to follow a ‘light touch’ process to fairly dismiss.
Several consultations will need to take place on what the ‘lighter touch’ dismissal procedure will look like, as this has not been confirmed, before being set out in regulations. Importantly, this will only apply to dismissals for conduct, capability, illegality or some other substantial reason relating to the employee but excludes redundancy.
To mitigate the potential rise in legal claims, the Government has suggested that it will identify ways to signpost and support employees to ensure they have proper recourse if they are unfairly dismissed during their initial period of employment, but also make clear where bringing claims might be unsuccessful. The Government has also indicated that it will be consulting on whether tribunals should award less compensation in cases where the employee has been dismissed during the initial period of employment.
The Government believes that these reforms will not stop employers from fairly dismissing employees but that the changes are designed to set clear expectations of performance and ensure employees understand the standard they are required to meet. Therefore, going forward, employers should monitor and hold regular performance reviews during the initial period of employment, as delaying difficult decisions regarding underperforming employees will become more risky as the scope for unfair dismissal claims widens.
If you have any questions in relation to the Employment Rights Bill or employment law more generally, please do not hesitate to contact a member of the AfterAthena team (part of the Napthens Group) who are able to offer 30 minutes of free advice to QCS members.
