The government has reversed its original plan to introduce day-one unfair dismissal rights for all employees. Instead, the qualifying period will move to six months’ service, following strong opposition from employer groups and further challenge in the House of Lords.

 

What is still going ahead

Day-one rights to statutory sick pay and paternity leave remain confirmed and are scheduled for April 2026.

 

Current position

Unfair dismissal: 2 years → initially proposed 0 → now 6 months

Sick pay and paternity leave: Confirmed as day-one rights from April 2026

Probation reforms: Still under consultation

 

Why this change has been made

The House of Lords has twice supported a six-month qualifying period. Ministers have accepted the amendment to avoid delay to the wider Employment Rights Bill.

 

What employers need to consider

• Probation periods – Do current internal policies align with a six-month threshold

• Risk management – Documentation and early performance oversight

• Contracts and handbooks – Onboarding and dismissal processes may need review

• Workforce planning – Impact on recruitment and capability decisions

 

Recommended next steps

• Audit probation policies and dismissal procedures

• Update contracts, handbooks, and template letters

• Train managers to address underperformance from day one

• Assess any planned restructure in line with the new timeframes

 

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Employment Law Update: Unfair Dismissal Awards May Soon Be Uncapped 12 – 12 – 25

The government has announced a significant proposed change to unfair dismissal compensation—just days after confirming the qualifying period will be reduced to six months.

Proposed change

The compensatory award cap for unfair dismissal claims may be removed entirely, meaning compensation could become unlimited if the amendment is passed.

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What this means

Currently, awards are capped at the lower of £118,233 or one year’s gross pay. Removing the cap would align unfair dismissal with discrimination and whistleblowing claims, where compensation is already uncapped.

This change is likely to make claims more attractive—particularly for higher earners—and could increase the value of disputes.

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Implications for employers

• Greater financial exposure in any dismissal dispute
• Higher risk with new starters, who would gain protection after just six months
• Increased likelihood of claims, especially from senior or well-paid staff
• Stronger emphasis on fair process, evidence, and documentation

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Recommended actions

• Review and reinforce dismissal, performance, and redundancy procedures
• Ensure managers are trained to follow fair and lawful processes
• Consider updating probation reviews and support mechanisms for new hires
• Assess whether earlier resolution or settlements may become more efficient

 

How HLTH Compliance can help

We support providers with compliant updates to policies, contracts, governance frameworks, and workforce procedures, ensuring preparedness as legislative changes take effect.

If you would like us to review your documents or provide HR governance support, we are ready to assist.