Human Resources

The Employment Rights Bill (ERB) is set to introduce significant changes to UK employment law, particularly in the area of unfair dismissal. While many view the ERB as a positive step towards better employee protection, concerns have been raised that it may inadvertently make hiring and employment management more costly and complex for businesses. These worries, voiced during the Bill’s passage through the House of Lords, suggest that the proposed reforms could reduce employer confidence and hinder growth.

We are yet to see the final version of the legislation. Therefore, this information is based on the information currently available.

Currently, employees need to have worked for their employer for at least two years to qualify for unfair dismissal protection.
However, one of the most significant changes under the ERB is the proposal to make unfair dismissal a day-one right, with a limited exception that this does not apply to employees who accept job offers which are withdrawn before they commence employment.

As a result, employers will no longer be able to follow a shortened process (circumventing a fair reason and fair process) to dismiss staff with less than two years’ service, once this provision is in force. Although, it is important to flag that there are claims employees can currently pursue with less than two years’ service, including discrimination under the Equality Act 2010, being subjected to a detriment for ‘blowing the whistle’ and being dismissed for raising a health and safety concern. Therefore, a shortened process is not currently always appropriate in any event.

By way of summary:

• The ERB introduces the concept of an ‘initial period of employment’ during which a modified version of the right to unfair dismissal will apply. The duration of this initial period is not specified in the ERB, but will be determined through regulations. The Government’s current preference is for a nine-month period
• It is proposed that there will be a ‘light touch’ procedure for dismissals during the ‘initial period of employment’, which are shown to be for poor performance, misconduct, capability or some other substantial reason relating to the employee
• However, redundancy dismissals and dismissals related to business reorganisations will still require a full, fair dismissal process from day one
• The exact details of the ‘light touch’ process remain unclear, but it may involve something as simple as holding a meeting with the employee
• There may also be a lower compensation regime for unfair dismissals in the initial period

As the changes aren’t expected to come into effect until Autumn 2026, many areas of the ERB, such as the length of the initial employment period and the specifics of the dismissal process, will need further clarification through regulations. However, some potential impacts on businesses include:

• Initial Period Management: If the initial period lasts nine months, employers will need to monitor new employees closely, particularly within the first few months, to ensure they are on track. Decisions about whether to retain or dismiss the employee should ideally be made by the six-month mark, allowing enough time to follow the light-touch dismissal process
• Management Training: Employers will need to ensure that managers are well prepared to handle performance and conduct issues during this initial period. Managers will need training on how to address employee concerns constructively and set clear improvement plans
• Recruitment Processes: With unfair dismissal protections from day one, it becomes crucial for employers to hire candidates who are a good fit for the role from the outset. Businesses will need to refine their recruitment and assessment processes to minimise the risk of hiring employees who may not meet expectations

If you have any questions in relation to the ERB and proposed changes to the Unfair Dismissal regime, please do not hesitate to contact a member of the AfterAthena team (part of the Napthens Group) who are able to offer 30 minutes of free advice to QCS members.