The Government has confirmed that protection against unfair dismissal will not be available from the first day of employment as originally promised in the Labour manifesto for the 2024 General Election. Instead, employees will need six months of service before they can potentially bring a claim for unfair dismissal. This represents a significant departure from Labour’s election pledge of ‘day one rights’, but it still marks a major reduction from the current two-year qualifying period. The Department for Business and Trade has described the six-month threshold as a workable compromise following negotiations with unions and business groups The previous proposals for a statutory probationary period (or ‘initial period of employment’) will now no longer apply.

Qualifying period

The qualifying period will be set in primary legislation, rather than secondary legislation as is the case currently, making it more difficult for future governments to reverse. The change is intended to break the Parliamentary deadlock between the House of Commons and the House of Lords.

Uncapped compensation

Another important development concerns compensation for unfair dismissal in employment tribunals. At the time of writing, unfair dismissal compensation is composed of a compensatory award comprising loss of earnings. The compensatory award is currently subject to two caps- either £118,223, or 52-weeks’ salary- whichever is lower. After its u turn on day one rights, the government also inserted an amendment to the Employment Rights Bill that would remove both caps.

Following further debate, on 17 December 2025, the House of Lords adopted the proposed abolition of the caps subject to the government publishing an impact assessment prior to their implementation. Removing this upper limit would likely lead to an increased number of claims by higher earners.

However, in practice, most claimants are unlikely to reach the threshold of the overall cap but removing the 52-week restriction could ensure higher compensation for those on lower salaries.

Impact on employers

For employers, the reduction of the qualifying period to six months will have far-reaching consequences. The two-year window to assess new hires will no longer exist, meaning that onboarding, induction, and performance management processes will need to be accelerated and carefully documented. Probation policies should be updated to reflect the shorter qualifying period, and managers must be trained to make fair, evidence-based decisions. Employers should also remember that certain claims, such as discrimination or whistleblowing, do not require any qualifying period, so risks remain even before the six-month threshold is reached.

Employers should also bear in mind that the current law counts an additional week of service when determining the qualifying period for employees with more than one month’s service, to account for statutory notice. This will likely remain the case for the new changes. Therefore, terminating employment at exactly six months, or even the day before the sixth

month anniversary, without accounting for this notice period, could leave an employer vulnerable to a potential claim for unfair dismissal if they do not conduct a fair process.

Looking ahead

Although the unfair dismissal protections were originally expected to take effect in late 2027, the adopted Employment Rights Act means that the change to the qualifying service period will come into force on 1 January 2027. The right would also apply retrospectively, meaning anyone employed from July 2026 would gain the right when it came into force. Employers should begin preparing now by reviewing contracts, policies, and performance management frameworks to reduce the risk of claims and ensure compliance with the new law. Most commentators assume that the abolition of the cap on the compensatory award would also take effect on 1 January 2027, but the government has not confirmed this.

Please note the contents of this article do not constitute legal advice. If you require any further information or if you would like our assistance, please contact us at employment@berrysmith.com or on 02920 345 511.