The House of Lords voted to amend the Employment Rights Bill, which would replace unfair dismissal rights from day one with a qualifying period of six months.
Labour’s election manifesto last year included a key promise: the right to bring a claim against unfair dismissal on day one.
Early drafts of legislation mentioned an “initial employment period” where employers could dismiss their staff for any number of reasons. However, this period wasn’t specified.
The Lords have voted to eliminate this period completely and amended the Bill in order to reduce the qualification period for unfair dismissal, from two years currently to six months.
It would also mean that there is no need for a new legal framework to account for the qualifying period.
The new legislation would also ease the burden on tribunals, as employment lawyers are concerned about a increase in employment litigation.
The Lords supported the amendment with 304 votes against 160. Lord Hunt of Wirral, a crossbench member of parliament and Lord Vaux from Harrowden sponsored the amendment.
If the Bill is sent back to the House of Commons, the amendment may be rejected. The ‘day one’ rights may still be implemented, but with complex conditions regarding the initial period of employment. This could last longer than six-months.
Stephen Simpson, Brightmine’s employment law and compliance specialist, called the Lords vote a “significant” moment for the Employment Rights Bill. Brightmine’s research shows that over three quarters of HR professionals (76.3%) believe day-one unfair dismissal will have a major impact on their organization.
Simpson stated: “Under the current rules, employers are more flexible in managing underperforming employees within the first two year of employment. If the changes are implemented, companies would still be able to use probationary periods as long as they demonstrate that the process is fair from the beginning.
This increases the pressure on HR departments to juggle many moving parts, especially if line managers do not follow the correct process. The Lords’ refusal highlights the risks associated with introducing major reforms in Labour’s first half-year of office without consulting employers.
The HR teams are already under pressure and the risk that tribunal claims will increase is real if they are not handled carefully.
According to a road map released by the government in July, the changes to unfair dismissal laws are scheduled to take effect in 2027.
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