The Employment Rights Bill (ERB) has been subject to a game of ‘parliamentary ping pong’ between the House of Commons and the House of Lords over the last few months, with disagreements over several key provisions, holding up it’s receiving royal assent. One of the most controversial issues has been the proposed day one right to protection against unfair dismissal, which was a Labour Government election manifesto commitment. David Sheppard and Elen Masters explore further below.
What’s changed?
On 27 November 2025, the Government announced a major policy shift. Instead of giving workers the right not to be unfairly dismissed from their first day of employment, subject to a statutory probationary period of around nine months, the qualifying period to be able to bring such claims will now be six months, down from the current two-year period.
This change is seen as a compromise to break the Parliamentary impasse and help the ERB pass through Parliament quickly and avoid further delays or rejection in the Lords. It also has the attraction of being more clear and simple for both employers and employees, compared to having a complex statutory probationary period for the first nine months of service.
The story so far
One of Labour’s 2024 election manifestos was a promise and plan ‘to make work pay’, which became the foundation of the ERB. The ERB has been described as the biggest overhaul of employment rights in a generation, including:
- Enhanced family-friendly rights
- Greater flexibility for workers
- Restrictions on zero-hour contracts
- A crackdown on ‘fire and rehire’ practices
Until now, the Government has been firmly committed to making unfair dismissal protection a day one right. Moving to six months marks a surprising and significant change in that policy.
Other possible changes
There are also suggestions, as part of a compromise between Government, unions and business representatives, that the cap on compensation for ‘ordinary’ unfair dismissal claims could also be reviewed. Currently, the cap is the lower of one year’s gross salary or £118,223 (adjusted annually for inflation). It’s unclear whether this cap will be removed entirely or modified in another substantial way. If the cap is removed, it will mean an unfair dismissal claim poses a much greater potential liability for employers and makes it more difficult to estimate any potential exposures in making business decisions.
Also, the Government has also indicated that the six-month qualifying period will be set primary legislation, rather than adjusted via statutory instrument in the past, making it harder for future governments to reverse the change.
What does this mean for employers?
There is little doubt that the ERB, once it becomes law, will still mark a historic shift in employment rights in the UK, which will undoubtedly have a substantial impact on employers. Currently, employees need two years’ service to claim unfair dismissal. Reducing this threshold to six months, while not as dramatic as a day one right, will still have a considerable impact on employers and how they manage recruitment and probationary periods. The last time a 6-month qualifying period was in place was from 1974 to 1979, when the right not to be unfairly dismissed was first implemented into law.
Employers should note current legislation deems an extra week of service when calculating the qualifying period for unfair dismissal for employees with more than one month of service. This means that dismissing an employee exactly on or a day before six months service, without factoring in this additional week, could still result in an unfair dismissal claim being brought: we expect many unsuspecting employers will be caught out by this provision.
Accordingly, probationary review meetings will need to be carefully planned to ensure any decision to terminate is in good time prior to six months service to avoid the risk of an ‘ordinary’ unfair dismissal claim. Employers should also be aware that unfair dismissal claims for reasons linked to raising whistleblowing concerns and other certain proscribed reasons will still not require any qualifying period of service, nor will claims for discrimination under the Equality Act. There will remain many other legal risks in terminating prior to six months other than unfair dismissal claims.
The original proposal for a day one right was scheduled to come into effect at some point in 2027, giving employers time to prepare and consult on the change. However, given the shift to a more simple six-month qualifying period, it is uncertain whether these timelines will still apply, and there is the potential the change will take effect for new starters much sooner at some point in 2026, potentially as early as next April.
What happens next?
These latest amendments to ERB have not yet been published, so the full scope of this change is still uncertain. However, the House of Commons is scheduled to vote on the proposed amendments on 8 December 2025. If approved, the new Employment Rights Act 2025 could still come into effect this year, rather than slipping into 2026 as recent Parliamentary delays suggested.
For the Bill to receive royal assent and become law before the new year, the House of Lords must also agree to the amendments. It remains unclear whether there will be continued resistance in the Lords on other parts of the Bill, which could affect the timeline. We will continue to monitor developments closely and provide updates as soon as more details are confirmed.
How can we help?
Unfair dismissal rights are important but they are just one part of the ERB, and many other significant changes will take effect. If you need advice on how these changes could affect your business, please don’t hesitate to get in touch with the Employment team.
