Qualifying period to stay but reduced
A Government press release has confirmed that, following discussions with trade unions and business representatives, the qualifying period for unfair dismissal will be reduced from two years to six months – a clear backtrack from the day-one protection pledged. The Government has committed to ensure that the unfair dismissal qualifying period can only be varied by primary legislation – meaning any future change to the qualifying period would require greater parliamentary scrutiny.
It is important to remember that employees are protected against unfair dismissal from day-one if there are automatically unfair grounds, such as dismissal because someone is pregnant.
Compensation - has the cap gone altogether?
Compensation for unfair dismissal is ordinarily subject to a statutory cap. The press release states that “the compensation cap will be lifted”. It is unclear exactly what this means at this stage. This could be interpreted as the cap being removed or that the cap will simply be increased. An unexpected decision, given that it primarily advantages higher earners.
The Employment Rights Bill (“the Bill”) can now (presumably) progress - is this the last U-turn?
Day-one unfair dismissal protection was a major sticking point in the House of Lords leading to a Ping Pong within Parliament as the Bill went back and forth between the two Chambers. With this significant U-turn the Government is hopeful that the Bill can progress and the implementation timetable will not slip. For more information on the Government’s Roadmap please see our Legal Update.
Comment
Employers are likely to welcome the decision to remove the proposed day-one right to claim unfair dismissal. However, it is important to remember that the qualifying period is still being significantly reduced from two years to six months. Despite this policy reversal, employers should take the opportunity to review recruitment practices and ensure probationary periods are robust. With only six months to assess whether an employee is the right fit, performance management and disciplinary procedures must be clear, consistent, and fit for purpose.
It will be important for stakeholders to engage in the consultation process to help shape the new legislation into a workable format.
