Day one unfair dismissal rights – what the new law means

One of the Labour government’s flagship manifesto pledges is moving closer to fruition: unfair dismissal protection is set to become a day one right for employees, meaning employees will gain day one unfair dismissal rights under the Employment Rights Bill (ERB).  The two year service requirement, will be repealed.

The Government proposes a degree of procedural leeway during an initial nine-month period of employment – in effect, a statutory probationary period, during which a ‘light-touch’ dismissal process will apply, but this may offer cold comfort to employers.

What are day one unfair dismissal rights and what’s changing?

Currently, employees can only claim unfair dismissal once they have acquired two years’ service. The ERB will remove this altogether; replacing it with an initial period of employment during which employers will be able to dismiss for a reason related to the employee. This will be subject to a ‘light-touch’ dismissal process and procedure.

Employers will not need to follow comprehensive procedural steps as currently required after two years’ employment if the reason for dismissal is a reason related to the individual – namely, conduct, capability or some other substantial reason warranting dismissal. The current proposal is that this ‘light-touch’ approach will involve a basic meeting with the employee to explain concerns about performance, conduct, or suitability for the role.

Importantly however, redundancy dismissals will not fall under this regime. Employers will need to follow the usual unfair dismissal standards from day one, even where redundancies arise during the initial period.

Why day one unfair dismissal rights matter for employers and employees

The reform represents the most significant change to unfair dismissal law in decades. On one hand, it increases employee protections dramatically, allowing claims from the very start of employment. On the other, it offers employers flexibility during the initial period of employment.

The Government argues that this balance gives employees security without stagnating recruitment but focus groups and businesses have expressed concerns. Conservative peers in the House of Lords (where the Labour Government does not have a majority), led by Lord Sharpe of Epsom, succeeded in passing an amendment to retain a six-month unfair dismissal qualifying period in July. While this is unlikely to survive when the Bill returns to the Commons, it highlights unease about the impact that the removal of the two year qualifying period will have on employers.

The Federation of Small Businesses has warned that day-one rights could discourage hiring and investment, with smaller firms especially vulnerable given their limited HR support.

Meanwhile, employment lawyers have highlighted technical concerns – for example, that the expiry of a short fixed-term contract could now amount to a dismissal attracting unfair dismissal rights.

Probation, procedure and practicalities

For employers, the key takeaway is that probation periods (and monitoring employee suitability during this period) will matter more than ever.

Employers are likely to want to document their decisions carefully – for example, following up capability meetings in writing – to protect against claims. As always, the need for a paper trail will be paramount.
Beyond the initial period, the full unfair dismissal rules will apply, making it essential for managers to address performance and conduct issues promptly and consistently.

Compensation under day one unfair dismissal rights

Another feature of the reforms is the ability for the Secretary of State to cap compensation for unfair dismissal claims brought during the initial period of employment. This reflects the Government’s view that businesses should not face the same level of liability when dismissing probationary staff for capability or conduct reasons.

That said, protections for automatically unfair reasons – such as dismissals linked to pregnancy, trade union membership, or whistleblowing – remain untouched. These claims will continue to carry no minimum service requirement and can attract full remedies.

What’s next for unfair dismissal law and the Employment Rights Bill

A formal consultation on the new dismissal framework is expected in the autumn. This will cover the proposed nine-month length of the initial period, the scope of the light-touch procedure and the compensation regime.

Whatever the outcome, the reforms mark a fundamental shift in UK employment law. Employers will need to rethink recruitment strategies, probation management and dismissal procedures. For employees, the change signals greater job security from the very first day.

Whether this balance between fairness and flexibility delivers in practice will become clear only once the new rules take effect.

Employment law advice on day one unfair dismissal rights

At Thomas Mansfield Solicitors, our specialist employment lawyers advise on all aspects of unfair dismissal. We help businesses anticipate legislative change, update contracts and policies and train managers to apply fair procedures with confidence.

Get in touch today for clear, practical advice on managing dismissals, staying compliant as reforms take shape including day one unfair dismissal rights.

Antonia Brewer