Employment Rights Bill: qualifying for unfair dismissal

The introduction of ‘day 1’ employment rights was a key feature of the Employment Rights Bill and a manifesto commitment made by the Government. With the Bill stuck in parliamentary ‘ping pong’ between the Commons and the Lords in recent weeks, the biggest hurdle for the Government to overcome appears to have been the introduction of ‘day 1’ rights to claim unfair dismissal, which attracted sustained criticism from many employer representatives and business groups.  

A six-month qualifying period confirmed 

It was confirmed by the Government on 27 November 2025 that it had reached agreement with ‘key stakeholders’ to accept the amendment put forward by the House of Lords to reduce the qualifying period for claiming unfair dismissal from the current two years to six months. This concession is likely to mean that the Bill can now move forward and be passed into law, perhaps by Christmas. 

As a consequence of this amendment, it is likely that provisions in the Bill for an ‘initial period of employment’, a form of statutory probation period during which a ‘light touch’ process for dismissal would have been permitted, will also now be dropped. 

In its press release published on 27 November, the Government states that it will ensure that the unfair dismissal qualifying period, which currently can be varied very easily by statutory instrument, can only be varied in the future by primary legislation. This will necessitate full parliamentary scrutiny before the qualifying period is changed again and make it harder for any future government to increase it. 

Compensation cap ‘lifted’ 

The press release also makes reference to the compensation cap for unfair dismissal being ‘lifted’. It is not immediately clear what is intended by this statement, and we will need to see the tabled amendments to the Bill in due course. While not yet confirmed by the Government, it appears that the intention is to remove the current cap of 52 weeks’ pay for the unfair dismissal compensatory award in cases of ordinary unfair dismissal. The statutory maximum award (currently £118,223 and subject to annual uprating) is expected to remain in place, meaning that those on lower salaries can potentially claim compensation for more than one year’s pay but the award will not be unlimited, as it is for discrimination and whistleblowing claims. 

The Birketts view 

As a manifesto commitment, it was politically very difficult for the Government to abandon day 1 rights to claim unfair dismissal, and it is possible that the change in the rules for the calculation of compensation was offered in exchange for the unions’ agreement to this amendment.  

The shift in policy is a sensible compromise that will come as a relief to the majority of employers, particularly smaller employers who might have been reluctant to hire new employees, knowing that they could face an unfair dismissal claim right from the start of the employment relationship. Concerns were voiced by many in the legal profession as to how an already overwhelmed tribunal service would cope with a further uptick in claims. 

The introduction of a statutory probation period during an ‘initial period of employment’ would have required employers to adapt to a new process, likely leading to confusion on the part of managers as to which process should be followed. It would no doubt have resulted in a significant body of case law to establish the applicable legal tests.   

Next steps 

The next date for the Bill to be considered in the House of Commons is 8 December 2025, following which it will return once again to the Lords on 10 December. In view of the Government’s significant concession, it is possible that we will see Royal Assent in time for Parliament’s Christmas recess, which starts on 18 December (19 December for the Lords).