The UK government is set to introduce significant changes to the unfair dismissal regime under the Employment Rights Bill. These changes are expected to have a profound impact on both employers and employees. Here’s a detailed look at the key areas and their implications.
Day One Right to Unfair Dismissal Claims
One of the most notable changes is the introduction of the right to bring an unfair dismissal claim from the first day of employment. Currently, employees need to have two years of continuous service to be eligible to make such a claim. The changes that are being proposed introduce a ‘day one’ right for employees not to be unfairly dismissed that would come into force “no sooner than” Autumn 2026. This shift aims to provide greater protection for employees but will require employers to be more diligent from the outset.
What are the Implications for Employers?
We understand at present that the changes will be subject to a new “initial period of employment” (IPE) which will essentially act as a statutory probationary period, allowing employers to use a modified, “lighter-touch” process to dismiss employees for reasons like capability or conduct. However, proposals state employers must still meet with employees to discuss performance issues, and employees will have the right to be accompanied by a colleague or trade union representative.
Employers will therefore need to ensure that their dismissal processes are fair and well-documented from day one.
Changes to Compensation
The government is also considering changes to the compensation regime for unfair dismissal claims made within the initial period of employment. Currently, the maximum compensatory award is up to £118,223 or 52 weeks’ pay, whichever is lower. The new proposals suggest that this cap could be reduced for claims made during the initial period.
Employers will need to adjust their financial planning to account for potential changes in compensation awards. Understanding the new compensation limits will also be crucial for managing the financial risks associated with unfair dismissal claims.
Pre-Employment Claims
The new legislation will supposedly bar claims from individuals who have not yet started their employment, except in cases where the dismissal is for a specified reason, such as pregnancy or the assertion of a statutory right. This change would provide clearer guidelines on the rights of prospective employees, reducing the risk of pre-employment claims.
Impact on Employment Tribunals
With the removal of the two-year qualifying period plus a proposed extension of the time limit for employment tribunal claims including unfair dismissal to six months (up from the current three months), there is an expectation of a great increase in the number of unfair dismissal claims being issued. Employment tribunals are already experiencing high caseloads, and this change could exacerbate the situation. Tribunal delays may impact the resolution of disputes, so employers should plan accordingly, be prepared for a potential increase in litigation and where appropriate consider alternative dispute resolution methods.
Conclusion
The upcoming changes to the unfair dismissal regime will represent a significant shift in employment law. Employers will need to adapt their policies and practices to ensure compliance and mitigate risks. Staying informed and seeking legal advice where necessary will be crucial in navigating these changes effectively.
Further Information
If you would like more guidance on how these changes could affect your organisation, or assistance in updating your employment practices, please contact Anne-Marie or Sophie Banks on: hello@dixcartuk.com.
