Beyond the Employment Rights Bill - Government drops 'day one' unfair dismissal

In a surprising move, the UK government has officially retreated from its manifesto commitment to make unfair dismissal a ‘day one’ right. The government confirmed in a press release yesterday afternoon that, following conversations with trade unions and businesses, it will instead reduce the qualifying period for unfair dismissal from two years to six months. This follows a protracted ‘ping pong’ process between the Houses of Commons and Lords on the Employment Rights Bill (the Bill), with unfair dismissal as a ‘day one’ right being one of the key sticking points. The government hopes that its compromise will allow the Bill to reach Royal Assent without further delay. 

More surprisingly, the press release also states that, ‘to further strengthen these protections… the compensation cap for unfair dismissal claims will be lifted’. It is not clear from that wording whether the cap (which currently sits at £118,223) will be removed entirely or simply increased. It would be unprecedented for unfair dismissal compensation to be uncapped like it is for discrimination and whistleblowing claims. Given that a complete removal of the cap has not been foreshadowed in any recent announcements or the manifesto (other than in a here. Please contact your usual Freshfields contact should you wish to discuss anything in this blog post.