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What changes are coming to unfair dismissal?

As predicted by commentators ahead of the July 2024 General Election, the new Government looks set to introduce sweeping changes to unfair dismissal regulations through the Employment Rights Bill – announced in the King’s Speech.

The Bill, if passed, will introduce a number of new protections for employees, including:

Day-one rights to parental leave and Statutory Sick Pay
Increased access to flexible working
Tighter restrictions around dismissing mothers in the first six months after maternity leave
A ban on ‘exploitative’ zero-hours contracts which benefit only the employer

However, one of the most significant proposals is the introduction of the day-one right to claim unfair dismissal – a right which is currently introduced after two years of employment with that employer.

Unfair dismissal in law

In law, there are three broad reasons why a dismissal might be considered unfair:

Lack of fair reason – Employers must dismiss employees for a fair reason, such as incapability (unless due to illness), misconduct, redundancy or a legal reason, such as loss of a professional license
Lack of fair procedure – Even if the reason for dismissal is fair, it may be considered unfair if the employer fails to follow correct procedures
Automatically – Some reasons for dismissal are automatically unfair from day one of employment, including for being pregnant, for having a characteristic protected under the Equality Act, asking for a legal right, being a trade union member or taking part in official industrial action.

The third category already applies to all employees from day one, but the Bill would extend the first two to new employees as well.

There is also the separate category of ‘wrongful dismissal’, in which the employer has breached the employee’s contract in some way. This will remain in place and length of service has no bearing on making a wrongful dismissal claim.

The question of probation

Probationary periods are standard practice among employers, and briefing notes for the Bill make it clear that employers will be allowed to ‘operate probationary periods to assess new hires’ – but it is currently unclear how this will work in relation to unfair dismissal claims.

Employers are typically allowed to dismiss staff within their probation period with a short notice period and for any reason (as long as it is not discriminatory or otherwise ‘automatically unfair’).

However, with day-one rights to claim unfair dismissal, we are likely to see an uptick in the amount of claims from individuals dismissed during or at the end of their probation.

Employers need to make it clear, both verbally and within the contract, that a probation period still applies and that employees can be dismissed during it for fair reasons of conduct, capability or redundancy, for example.

There has been some concern among employees that the Bill will result in inflated probationary periods, but this is unlikely.

The Bill aims to protect employees, so the Government is likely to crack down on any activity that tries to circumvent new rules. Additionally, the vast majority of reasons behind dismissal during the probationary period are already considered to be ‘fair’ – such as performance.

Please contact our Employment Law team for further advice on unfair dismissal claims and changing regulations.

Amanda Hyam

Head of Dispute Resolution and Employment

I have specialised in Dispute Resolution, Civil Litigation and Employment law for more than 15 years. I understand how daunting the prospect of litigation can be and because of this I am always available to discuss concerns.