Comment: Unfair dismissal from day one will become law – but not just yet

Reforms will represent a hugely significant change to employment law, says Travlaw’s  Ami Naru

Q

In early 2025, I will need to recruit staff for my travel business, but I am nervous that employees will walk in with an armful of new rights and protections. Is it true that from day one of their employment a new employee will have unfair dismissal rights, and I can no longer terminate employment as easily during a probationary period if things don’t work out?

A

First of all, it is great that your business is needing to recruit more staff – certainly a good sign for the travel industry as a whole.

The need for qualifying service of employees for unfair dismissal has been around for nearly 50 years. At its lowest, the qualifying service was six months; and at its highest, two years – the level currently. Historically, shorter qualifying service has been in place under a Labour government.

Moving forward, the need for qualifying service will be reformed because of the Employment Rights Bill, which the government announced on October 10, 2024, within 100 days of Labour coming into power. This was a promise in its manifesto.

Labour proposed wide-ranging and fundamental reforms to employment law, including the abolition of qualifying service for unfair dismissal claims. Once implemented, unfair dismissal will become a day one right for employees, subject to a new, modified “light-touch” dismissal procedure applicable in most cases during an initial period of employment (commonly referred to as a probationary period).

At this stage we do not know what the length of that “initial period” of employment will be, although it has been mooted among the ranks of government to be between three and nine months.

Much of the detail will be contained in regulations and is yet unknown. The reforms proposed by the Employment Rights Bill will need to go out to consultation, then through both houses of Parliament, before finally obtaining royal assent and becoming law. This is a long-winded process, and there are suggestions that this change in law will not be implemented until at least autumn 2026.

Consequently, the law will remain unchanged if you are recruiting in early 2025, and employees will still need to have two years’ service to claim unfair dismissal. During the initial period of employment, you should use probationary periods effectively to monitor and review suitability for ongoing employment.

Your contracts of employment should be clear on the length of the probationary period and the applicable notice period during this time, which is often shorter than in the post-probationary period. Your recruitment processes should also be reviewed, so that you are doing the necessary background checks and getting into a good habit for the future, when you will have less time to consider the suitability of an employee.

The reforms will represent a hugely significant change in the unfair dismissal landscape and are likely to result in a marked increase in employment tribunal claims from employees, who will no longer need to meet the two-year qualifying requirement to challenge the fairness of a dismissal. Prior to the law changing, employers would be wise to review their recruitment practices, employment contacts and probationary periods.

This article is not a substitute for full legal advice.