What the Employment Rights Bill means for unfair dismissal law

New Government, new proposed employment law changes. 'Twas ever thus. Within the Employment Rights Bill, amongst a raft of proposed changes spanning reforms to the law of industrial relations, family-friendly rights, zero hours contracts and fire and rehire, the most heralded reform is the one to unfair dismissal law.

But just how drastic a change does this look like being?

How is unfair dismissal law changing under the Employment Rights Bill?

All employers know about the two-year rule under which they are free, within that time period, to dismiss an employee with relative impunity (for the purposes of unfair dismissal law, anyway). But the Bill removes that two-year window, giving employees the right to make unfair dismissal claims from day one of employment.

This change was widely trailed beforehand and engendered much gnashing of teeth amongst employer groups. But the Government will be consulting on a 'statutory probationary period' or 'initial period of employment', (these terms are interchangeable) which will allow for an initial period to assess an employee's suitability for the role. This period was initially proposed to be nine months, although a subsequent amendment paper now indicates it will be between three and nine months.

Whatever the final number, during that period there is due to be an unspecified 'lighter touch' process which will result in a fair dismissal, probably involving meeting with the employee to discuss performance concerns and permitting a companion to accompany the employee.

That proposed new regime will cover dismissals within the statutory probationary period which are for some other substantial reason relating to the employee, capability, conduct or illegality. However, it will not cover dismissals for redundancy or restructuring, meaning that those dismissals will need to be carried out with current levels of reasonableness from day one. Somewhat incongruously, the two-year service requirement to qualify for a statutory redundancy payment is to remain in place.

The Government will also consult on what compensation will look like for successful claims during the statutory probationary period, which might tend to suggest a different and lower compensatory regime than that currently in place.

What does the statutory probationary period mean for unfair dismissal claims?

On the face of it, this new regime must surely lead to an increase in unfair dismissal claims, and in turn to further delays in an already over-burdened Employment Tribunal service. It is to be hoped that the legislation around the statutory probationary period, and whatever the light touch process needs to look like, is drafted with clarity. Those with long memories may remember the ill-fated statutory disciplinary and dismissal procedures, which generated more satellite litigation than just about anything else this writer can remember.

All that having been said, and looking on the bright side, one beneficial consequence of the new unfair dismissal regime might be a decrease in the number of tenuous and contrived discrimination or whistleblowing claims currently made to circumvent the two-year rule, but which can be difficult to knock out early.

Anyway, there is no need to panic just yet. The expected implementation date is autumn 2026, providing plenty of scope for employers to track the progress of the consultation and take preparatory steps well in advance of that date.

How should employers prepare for the new unfair dismissal rules?

Those steps should undoubtedly focus on recruitment processes, as getting the right person will become even more important than it has ever been. In particular, that will mean tightening up on interview processes, chasing up appropriate references where at all possible, and utilising a detailed induction and training programme.

And what of probationary periods in the contract of employment? With the current two-year rule, probationary periods have realistically afforded employers minimal benefits, usually a shorter notice period with which to dispense with your employee's services.

And now with the impending introduction of a statutory probationary period, along with the light touch dismissal procedure which will be required, the advantage of incorporating a parallel contractual probationary period seems even more minimal.

For employers it will be key to ensure that job descriptions and expectations of staff are clear and unambiguous, that training is robust, and reviews undertaken regularly by line managers who are empowered to do them, so that if required there is demonstrable evidence of performance concerns to justify and sustain a fair dismissal during the statutory probationary period.

As always, employers will adapt, as there is no choice, but it will pay to ensure that their processes and procedures are up to scratch and to take advice if they have any concerns.