Unfair Dismissal
In breach of the Salisbury Convention, the House of Lords continued to vote down the Government’s key manifesto commitment to introducing a day-one right to claim unfair dismissal. In view of the risk that workers would lose out on important rights should the Bill not achieve royal assent, the government reached a deal reducing the qualifying period to claim unfair dismissal from two years to six months, but with the cap on ordinary unfair dismissal compensation removed. The new rights will apply to employees who already have six months’ service on 1 January 2027, with other employees gaining protection once they have six months’ service.
The six-month qualifying period does not alter the position of employees who have been automatically unfairly dismissed such as on trade union grounds or for reasons of pregnancy, which remains a day-one right.
The power to vary the unfair dismissal qualifying period is removed and the six-month qualifying period is prescribed in the Act. This means that it will be harder for future governments to change the qualifying period as it will require a change to primary legislation.
The cap on unfair dismissal compensation will also be removed. It currently stands at the lower of either 52 weeks’ gross salary or a statutory cap (currently set at £118,223).
Visit our main Employment Rights Act Hub for further information.