Day one employment rights and unfair dismissal

Policy

One of the most significant reforms in the Government’s plans, the Employment Rights Bill makes provision for protection from unfair dismissal, statutory sick pay, parental leave and paternity leave to be available from day one as well as introducing a new statutory right to bereavement leave.

Unfair dismissal

• The Employment Rights Bill removes the current two-year qualifying period for unfair dismissal, making it available from day one of employment. The qualifying period has been present in some form since unfair dismissal was introduced in the 1970s so this is a significant change in the law, which will have an impact on day-to-day HR processes including hiring, performance management and termination of employees with under two-years’ service.
• The Employment Rights Bill will permit employers to implement probation periods called the “initial period of employment” and has promised to consult on the permitted length of the initial period of employment. The Government’s preference is for the initial period of employment to be a maximum of 9 months, but this may change during consultation. The outcome of this will then be set out in regulations.  
• The Employment Rights Bill includes powers for regulations to be made that will modify the test of fairness of the dismissal for certain dismissals where notice is given during the initial period of employment (so long as notice expires no later than 3 months after the initial period of employment). This will cover dismissals for reasons relating to the employee: (i) conduct, (ii) capability or qualifications (including performance), (iii) breach of a statutory duty or restriction, and (iv) some other substantial reason relating to the employee. This means that dismissal for redundancy and for some other substantial reason not relating to the employee will still require a full unfair dismissal process as for any other employee.  
• Exactly what this will require in practice will be subject to full consultation and will be set in regulations. However, the Government has indicated that there will be a “lighter-touch” process for qualifying dismissals during the initial period of employment. At present, the Next Steps document suggests that this lighter touch process could involve holding a meeting with the employee to explain performance concerns.
• The Government will also consult on whether changes to the compensation available for unfair dismissal during the initial period of employment should be made. A proposed Government amendment, agreed at the Committee Stage, would allow for there to be a cap on the compensatory award for unfair dismissal for employees dismissed during the initial period of employment – although details are not yet known.

Statutory sick pay 

The Employment Rights Bill will make the following changes to Statutory Sick Pay (‘SSP’): 

• Make SSP available from day one of absence, removing the three “waiting days” before it becomes payable; 
• Remove the lower earnings limit on eligibility (currently average pre-tax earnings of £123 per week); and 
• Allow for a lower rate of SSP (the current full rate is £116.75 per week) to be payable to those on low incomes. On 21 October 2024 the Government launched a Consultation on the best approach to this (a response is now awaited). This proposed a taper where SSP is payable at a percentage of weekly earnings or the prescribed SSP rate, whichever is lower. The consultation proposed three options for that percentage rate: 60%, 70%, and 80%. It seems that 60% is the lowest percentage that the Government will accept. 

These changes will mean that low earners will become entitled to SSP and that all SSP will be available from day one of sickness absence. 

Paternity and parental leave

• The Employment Rights Bill will remove the requirement for employees to have completed a qualifying period of employment to be entitled to take statutory paternity leave and statutory parental leave, making them available from day one.  
• This does not amend entitlements to statutory paternity pay, which will remain available only after 26 weeks of employment. Statutory parental leave will remain an unpaid right.  
• However, the Next Steps document commits to consulting on the parental leave system which “does not support working parents”. It is still not clear if the Government intends to consult just on the current unpaid right to take parental leave or is talking more generally about all types of parental/family leave (maternity, paternity, shared parental, adoption, etc) – see Family friendly rights: parental leave system.

New right to bereavement leave

• The Government is introducing a new day one right to bereavement leave. For more details see Family friendly rights: bereavement leave.

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Timing and developments

• Unfair dismissal: Included in the Employment Rights Bill. Consultation, regulations, and guidance needed (in particular in relation to the length of the “initial period of employment” and how the test of “fairness” will be modified for such dismissals in this period). The Government has committed to the changes not becoming effective no sooner than Autumn 2026.
• SSP: Included in the Employment Rights Bill. The Government launched a Consultation on 21 October 2024 which closed on 4 December 2024. A response is now awaited.
  • This right could be brought into force by regulations soon after the Employment Rights Bill becomes law (so during 2025) rather than waiting until 2026 as indicated for the majority of reforms in the Employment Rights Bill. However, firm details on timing have not yet been provided.
• Paternity, parental, and bereavement leave: Included in the Employment Rights Bill. Regulations will be required in respect of details on bereavement leave.
  • These rights are referred to as “immediate” changes in the Next Steps document, perhaps indicating that this is expected to be earlier in the Government’s implementation timeline than the majority of reforms in the Employment Rights Bill, which are anticipated for no earlier than 2026. However, firm details on timing have not yet been provided.