The big news of the last 24 hours has been the Government’s decision to change its manifesto promise of a ‘day one right’ to unfair dismissal to a ‘six month right’. While headlines are rightly focussed on the political impact of such a significant ‘U-turn’ on a flagship manifesto commitment, the reality is Ministers have decided to take action to end a Parliamentary log jam that risked delaying its flagship Employment Rights Bill from becoming law.

Today I spoke to Ed Vaizey on Times Radio to discuss what this change means for workers, businesses and the labour market.

A change of policy but workers and business now have a clearer picture

Moving from introducing a day one protection against unfair dismissal to one which takes effect after six months represents a significant shift of policy. But the Government had already been planning to introduce a new statutory probation period before workers would ultimately be able to fully access this new right. This period was also likely to be between six and nine months, but the fact it would require the implementation of a new mechanism outside of the primary legislation was causing concern amongst some employers and policymakers as to what it would mean in practice.

These details were due to finalised through consultation and secondary legislation after the main Employment Rights Bill gained Royal Assent. But the advantage of the Government’s decision to switch tact is that employers, unions and workers all now have a much clearer picture.

Essentially the Government has decided to retain a qualifying period for unfair dismissal, but dramatically reduce it from the current two years to six months. Work Foundation at Lancaster University research indicates that had this new right been implemented in this way in 2023, the number of people in severely insecure work would have fallen by 1.2 million and up to 3.9 million workers would have had more secure jobs. Furthermore, it would have disproportionately benefited women, young workers, workers from ethnic minority backgrounds and disabled workers who are each currently more likely the most precarious forms of employment.

In the end, these figures are broadly in line with what we may have expected had Government gone ahead with previous plans for a new six-month statutory probationary period in any case.

Separately, the Government has also raised the prospect of lifting the cap on the amount employees can claim for unfair dismissal. At the moment this is limited to 52 weeks gross pay or an award cap of £118k – whichever is lower. It’s unclear exactly what Government means by lifting this cap, and it is important they move to clarify their proposals as soon as possible.

Figure 1: Change in levels of job security in 2023 under new proposed day one rights with different probationary periods

Source: Work Foundation calculations of Labour Force Survey microdata 2022-2023 April-June quarters

What impact will the shift on unfair dismissal have on proposed workers’ rights?

For the last few months, the House of Commons and the House of Lords have been stuck in ping-pong, with Lords continuing to table amendments to the Employment Rights Bill. This change on unfair dismissal must now break the log jam, and enable the Government to move the Bill to Royal Assent rapidly.

Doing so will make it more likely that vulnerable workers will be able to access some of the new rights and protections in the Bill in April 2026 – including access to statutory sick pay from day one and paternity leave.

This shift may also mean the reduced qualifying period for claiming unfair dismissal can be fast tracked into implementation. Previously the ‘day one right’ was slated to be introduced in 2027, to allow for consultation time on the new statutory probation system. Without the need to do so, Government should look to introduce the new regulations as soon as is practical.

Finally, it’s important to note that these new rights will not only make work more secure overall, but could be vital in supporting more people with disabilities or long-term health conditions into work. This remains a significant challenge for the UK labour market with near record 2.8 million people economically inactive due to long-term illness.

Figure 2: Phased implementation timeline of the Employment Rights Bill

Striking a balance between delivering additional security and practical implementation

In making this shift the Government is attempting to balance delivering on the core purpose of the Employment Rights Bill to drive up security in the UK labour market, while ensuring reforms can be delivered more quickly, and practically implemented by employers.

However, we must avoid treating this shift as a signal to further dilute key elements of the Bill via secondary legislation or new codes of practice. The revised proposals demonstrate that it is possible for Government, businesses and the unions to get around the table and engage constructively in making the Employment Rights Bill as effective as possible without undermining its core purpose.

Engagement should continue on this basis, alongside ensuring the Fair Work Agency is properly resourced to ensure rogue employers don’t seek to circumvent the new regulations as they come into force.

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