Employment Rights Bill Update

Government drops day-one unfair dismissal plan — but risk hasn’t disappeared

December 2025

After months of back-and-forth between the Government, the House of Lords and business groups, there’s been a material shift in the Employment Rights Bill.

The headline: day-one unfair dismissal rights are off the table. Instead, the Government will introduce a six-month qualifying period.

That’s welcome news for employers, but it doesn’t mean a return to business as usual.

This reform moves risk earlier, sharpens expectations, and increases the cost of getting decisions wrong.

What’s actually changing?

The Government has accepted a House of Lords amendment to introduce:

• A six-month qualifying period for ordinary unfair dismissal

This replaces the proposed day-one right and is expected to pass when the Bill returns to the House of Commons.

The current two-year threshold will fall away.

Further consultation is expected on how the change will operate in practice.

The trade-off: higher financial exposure

To balance the shorter qualifying period, the Government has also confirmed:

• The qualifying period can only be changed by primary legislation

• Compensation caps for unfair dismissal will be lifted

While final details are still being confirmed, early indications suggest the current 52-week cap on compensatory awards could be removed.

If that happens, the financial exposure in unfair dismissal claims, particularly for senior or higher-paid roles, will increase materially.

What’s happening to probation periods?

The Bill originally proposed a statutory “initial period”, a light-touch probation framework.

Current reports suggest this may now be removed entirely.

If so, employers will be relying almost exclusively on their own probation processes to manage early exits fairly and lawfully.

In short: your internal process matters more than ever.

Who this hits hardest

This change will land most sharply for:

• Owner-managed businesses without in-house HR

• Professional services firms hiring senior or specialist roles

• Businesses with high turnover in the first 6–12 months

• Employers relying on informal or inconsistent probation practices

If your approach is based on trust, instinct or “we’ll see how it goes”, this reform brings that risk forward.

Why this matters more than it looks

Six months sounds manageable. In reality, it compresses risk.

Most unfair dismissal claims don’t arise because an employer didn’t care, they arise because issues weren’t dealt with early, clearly, or consistently.

When the qualifying period shortens:

• Mistakes happen faster

• Evidence windows close quicker

• Poor decisions cost more

This reform shifts pressure forward, into recruitment, onboarding and probation, where many businesses are least structured.

A critical reminder: probation does not override discrimination law

Many early exits don’t fail on unfair dismissal, they fail on discrimination.

Health conditions, pregnancy, age, disability and neurodiversity are common flashpoints.

Probation offers no protection if a protected characteristic is in play.

Early conversations, reasonable adjustments and careful documentation are not optional, they are essential.

Statutory Sick Pay from day one: a quiet but significant shift

Another important, and often overlooked, change is the move to Statutory Sick Pay (SSP) from day one of employment.

Under the proposed reforms:

• SSP will be payable from the first day of sickness

• The current three waiting days will be removed

• The lower earnings limit will be abolished, meaning more employees qualify

• Lower earners will be entitled to SSP at a percentage of earnings

This change is expected to take effect from April 2026.

Why this matters in practice

Day-one SSP changes the dynamic of early absence.

Previously, waiting days acted as a natural brake on short, early absences. Removing them means:

• Absence costs begin immediately

• Patterns emerge earlier

• Managers feel less certain about what they can and can’t say

The risk isn’t paying SSP. The risk is avoiding conversations, then trying to act later without evidence.

Handled badly, early absence management can quickly drift into discrimination risk — particularly where health conditions or neurodiversity are involved.

The probation + SSP overlap: where risk really sits

Day-one SSP and a six-month unfair dismissal window land together.

That creates a pressure point where:

• New starters may be absent early

• Managers hesitate or say nothing

• Decisions are delayed to “see how it goes”

Probation does not remove the need for fair, sensitive and well-documented absence management, It increases it.

What “good” probation now looks like

A defensible probation process isn’t bureaucratic. It’s predictable, fair and calm.

At minimum, it should include:

• Clear expectations from day one

• Planned review points (not reactive meetings)

• Honest feedback, even when it feels uncomfortable

• Written follow-ups

• A clear decision, confirm, extend or exit, with reasons

Probation isn’t about catching people out. It’s about deciding, early and fairly, whether the relationship works.

Employer checklist: are you protected under the new six-month rule?

Use this as a quick sense-check. If you hesitate on any of these, that’s your risk signal.

Recruitment & hiring

☐ Hiring decisions are based on clear role requirements, not gut feel

☐ Interview notes and selection rationale are documented

☐ Job descriptions accurately reflect the role

Onboarding

☐ Contracts are issued on or before day one

☐ Probation length, review points and expectations are clear

☐ New starters understand what “good” looks like

Probation & early performance

☐ Reviews are diarised and structured

☐ Feedback is specific, balanced and recorded

☐ Concerns are raised early, not saved to the end

☐ Support or adjustments are evidenced

Absence management

☐ Absence policies reflect SSP from day one

☐ Return-to-work conversations happen consistently

☐ Health concerns are handled sensitively and recorded

Contracts & risk awareness

☐ Probation clauses align with a six-month risk window

☐ Notice provisions are applied correctly

☐ Vulnerabilities are identified early

☐ Advice is taken before terminating where complexity exists

What to stop doing now

• Waiting until the final probation meeting to raise concerns

• Extending probation by default

• Letting managers “handle it their own way”

• Relying on verbal feedback alone

These habits were risky before. Under the new framework, they’re liabilities.

A quiet but important change: longer tribunal time limits

Tribunal time limits are also expected to extend from three to six months.

That means issues can resurface long after a decision feels “done”. Documentation, consistency and manager memory matter more than ever.

A note on changing terms

The Bill also tightens the rules around changing terms and conditions. Assumptions like “we’ll just tweak the role, hours or pay” are becoming riskier where agreement can’t be reached.

Flexibility now depends more on good contracting and good judgement, not last-minute fixes.

When does this bite?

• SSP from day one: April 2026

• Tribunal time limits extended: October 2026

• Six-month unfair dismissal qualifying period: expected 2027

• Compensation cap changes: likely earlier

This isn’t about panic. It’s about preparation.

The bottom line

The Employment Rights Bill isn’t just a legal update. It’s a behaviour change.

Most risk won’t sit in policies, it will sit with managers who don’t feel confident having early, uncomfortable conversations.

Businesses that hire well, manage early and document properly will feel very little disruption. Those relying on informality or tolerance will feel this change sharply, and expensively.

How Magenta HR helps

I work with business owners who want:

• Clear judgement, not HR noise

• Practical protection, not policy libraries

• Calm handling of early people decisions

Support typically includes:

• Probation and onboarding reviews

• Manager coaching for early conversations

• Risk-checks before exits

• Tribunal-ready documentation where needed

Most of my clients don’t call when something has already gone wrong, they bring me in to quietly stop it happening in the first place.

📩 samantha.newton@magentahr.uk