New 6 month qualifying period for unfair dismissal: How to prepare

The Employment Rights Bill has not enjoyed a smooth journey through the parliamentary process with the provisions for Day One Unfair Dismissal rights being one of the main sticking points. The majority in the House of Lords were concerned at the impact on business, and had several times proposed amendments to this reform, suggesting that a six -month qualifying period would be a better balance between helping workers and businesses and would avoid complications arising from the Bill’s proposed “Initial Period of employment”.

The Government has now announced that it will be changing the Bill to so that the qualifying period for unfair dismissal claims will move from the current two years to six months. This is certainly welcome news for the hospitality sector where day one rights would have increased the burden on operators who all employ high levels of staff and where staff turnover can be high.

Points to note are:

• There will still be some circumstances in which individuals have day one protection from unfair dismissal (eg whistleblowers)
• There will no longer be a cap on unfair dismissal awards (the current cap on compensatory awards being the lower of the year's pay and £118,223)

Compensation will still be based on lost earnings and it should be remembered that the average unfair dismissal award is currently around £14,000, so well below the current cap. Removal of the cap on compensation could, however, have a significant impact on:

• Employees in the public sector, or in private sector defined benefit pension schemes, who suffer substantial pension loss as a result of unfair dismissal
• Those very high earners who are unfairly dismissed
• Employees who suffer career-long loss as result of dismissal
• It could also have an impact on the ability to settle claims if claimants with unrealistic initial expectations can no longer be told that there is a clear limit to their claim

The Bill now needs Parliamentary approval. The Government proposes that the new rules will come into force on 1 January 2027.

For hospitality, a six month threshold will still increase exposure compared with today’s two year rule but avoids the operational burden of true day one claims in high turnover, multi site environments. 

Practical next steps: 

• Probation & documentation: Tighten probation review cadence (e.g., month 2–4 checkpoints) and ensure capability/conduct management is well evidenced before month 6. Contact us if you would like a quick audit
• Manager training: Refresh front line manager guidance on fair process, note taking and early intervention to avoid crossing the six month threshold without action
• Budgeting for awards: Scenario plan for higher compensatory exposure pending clarity on the cap

For more information contact Christopher Sing