Six month unfair dismissal qualifying period set in primary legislation
The new six-month qualifying period for unfair dismissal will be introduced through primary legislation, rather than the existing powers in the Employment Rights Act 1996.
The qualifying period becomes far harder for future governments to amend, creating stability for long-term HR planning. UK employers can now model policies, contracts and probation frameworks around a long-term, legally anchored six-month threshold. HR teams should begin updating internal dismissal procedures, performance management frameworks and manager training accordingly. This shift sits at the heart of the government’s revised employment law reform package.
Unfair dismissal compensation cap may be removed
The Department for Business and Trade has stated that “the compensation cap will be lifted”, though with unclear drafting. This creates two possible outcomes, either the compensation cap will be removed completely or it will be partially lifted. If the former, it would make unfair dismissal awards unlimited, similar to discrimination and whistleblowing claims. That would increase exposure for employers, especially in high-salary sectors and therefore, increases risk of tribunals and settlement negotiations. If the latter, the unfair dismissal compensation cap would still raise potential compensation levels and impact HR’s approach to litigation risk.
Day-one rights and new statutory sick pay rules
However, while day-one dismissal rights have been dropped, the government is going ahead with major new day-one employment rights, including:
- Day-one statutory sick pay (ending the waiting period)
- Day-one paternity leave (new entitlement from the start of employment)
This means HRIS, payroll systems and absence management policies will need updating. Plus, line managers must be briefed on new statutory leave rights and entitlement triggers. The government’s U-turn partly reflects concerns that day-one rights would place additional pressure on the employment tribunal system, which already faces significant backlogs. While the six-month threshold may limit new claims, HR teams should still anticipate increased attention on dismissal procedures, fair process, and evidence standards. Early conflict resolution, mediation, and structured performance management will be more important than ever.
What HR teams should do now
You should start to review contracts, policies and procedures including early performance processes and communicating changes to leadership, HRBPs and line managers. If you would like any more information or advice, contact the Employment Team at Downs Solicitors to see how we can help.
Contact Heather Love
