Unfair Dismissal Rights from day 183 of employment? Employment Rights Bill update.

Progress on the Employment Rights Bill had stalled over a disagreement on unfair dismissal rights.

In a move calculated to break the deadlock with the House of Lords, on 27 November 2027 a Government press release announced plans to make two major changes to the Employment Rights Bill:

1. Day-1 rights for new employees to claim unfair dismissal have been dropped. Instead, the current Government proposal is that employees will be able to claim unfair dismissal after 6 months of employment (approximately 183 days) as opposed to after 2 years which is the current entitlement.
   
   It appears that the Government is also dropping proposals for an “initial period of employment” (like a probationary period). With unfair dismissal rights from six months, employers will have a short period to assess an employee’s suitability and make decisions about capability and performance and terminate the employee’s employment if appropriate – without the employee being able to bring a claim for unfair dismissal. All other day 1 rights e.g. whistleblowing and discrimination remain in place.  
    
2. Lifting the compensation cap on unfair dismissal claims. The Government press release has said that “the compensation cap will be lifted” but does not contain any further detail or explanation.  
   
   This one is a bit of a surprise - earlier drafts of the Employment Rights Bill did not mention this.  Currently the compensation cap for an unfair dismissal claim is set at 52-weeks' pay up to a ‘compensation cap’ or maximum, set by Government each year (currently £118,233).   Commentators have suggested that the Government press release may mean that the cap of 52-weeks' pay will be removed, but that the overall compensation cap will remain.
    

If the Government press release is correct that the right to claim unfair dismissal from Day 1 really is being jettisoned, many employers will be relieved.  Delaying giving employees the right to claim for an unfair dismissal until they have been employed for 6 months would at least allow employers the opportunity to assess performance and provide time to assess whether ongoing employment is appropriate before the employee gains unfair dismissal protection. Note that some sources have suggested that this will now come in from 2026 rather than 2027 as originally planned.

We’ll hopefully be able to tell you more after the next Parliamentary debate on 8 December 2025.