Employment Rights Bill bitesize: unfair dismissal
17 October 2024
The Employment Rights Bill was published on 10 October 2024, setting out a wide range of ambitious workplace reforms. For an overview of the Bill, see our ‘headlines’ article.
In this series of ‘bitesize’ articles, we look at different key provisions of the Bill in more detail, consider the implications for employers and explain what the next steps will be.
Unfair dismissal: what does the Bill say?
The Bill removes the current requirement for employees to have a minimum of two years of service before they can bring a claim for ‘ordinary’ unfair dismissal (a dismissal that is not for one of the automatically unfair reasons with no qualifying period).
Under the Bill, new regulations will introduce a statutory probationary period (‘initial period of employment’) that will apply to new hires. The Government has suggested a period of nine months, subject to consultation. During this period the usual test of reasonableness for a fair dismissal will be modified, with a ‘lighter touch’ process to be followed. This means that employers will be able to terminate an individual’s employment without following a full process during the initial period of employment unless the dismissal is for redundancy, in which case a full process will still be necessary to ensure that the dismissal is fair.
According to the Government’s Next Steps document, also published on 10 October 2024, it is likely that during the initial period of employment, employers will be expected to hold a meeting with the employee to explain concerns about their performance before considering dismissal. Details of the applicable process will be set out in the regulations.
The Next Steps document also suggests that successful claims for unfair dismissal during the statutory probation period will be subject to a lower award of compensation, which will also be subject to consultation.
The Government has published a separate Factsheet setting out its proposals for reforming unfair dismissal.
What does this mean for employers?
Employers will need to take the necessary steps to ensure that their recruitment procedures are robust, increasing the prospects of selecting the right candidates for the job. Once we have a bit more clarity over the proposals, internal procedures for performance review during any contractual probationary period should be tightened up where necessary. Employers will also need to review existing policies to reflect the introduction of the statutory probationary period and ensure that managers understand the need to tackle any performance and conduct issues at an early stage.
It is likely that these changes will result in an increased volume of unfair dismissal claims, which will add to the workload of the employment tribunal system and probably mean even longer delays to hearing dates than we are already experiencing.
What are the next steps?
In the Next Steps document, the Government has committed to not introduce the changes to unfair dismissal before autumn 2026. It will be consulting over the details of the proposed changes, with a consultation likely to be issued in early 2025. Regulations will define the length of the statutory probation period and the process for termination that will apply during that period. The Government consultation will also consider how this will interact with the current Acas Code of Practice on Disciplinary and Grievance procedures.
Employers will therefore benefit from a long lead-in period, with time to review their internal procedures in advance of the changes taking effect.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at October 2024.