By Alex Hodson
During the most recent general election, the Labour Party pledged to abolish the two-year qualifying period required for employees to bring an unfair dismissal claim, a policy that has been in place since April 2012.
The introduction of the two-year rule was intended to reduce the number of employment tribunal claims, and it largely succeeded in doing so. However, it has long been criticised for leaving employees vulnerable during the first two years of employment, with some employers allegedly using the qualifying period to dismiss staff without recourse.
Proposed Change by Labour
In an attempt to further improve worker protection, Labour proposed introducing unfair dismissal protection from “day one” of employment. This marked a significant shift in policy.
When unfair dismissal rights were first introduced in 1971, employees required only six months’ service to qualify. Over time, this threshold increased, and the suggestion of removing it altogether came as a surprise to many employment law professionals.
However, with Tribunal claims already rising sharply, the system continues to strain under a backlog that predates the proposed reforms. The Employment Rights Bill, by granting unfair dismissal rights from day one, is expected to further amplify claim volumes and wait times.
Labour Responds to Employer Concerns
The “day-one” rights raised concerns among employers, particularly regarding the ability to manage underperforming new hires without legal risk. In response, Labour indicated that a clear and fair system of probationary periods would be mapped out and would be sufficient to address these concerns, allowing employers to assess suitability during the initial months of employment.
However, the business community, especially small businesses, had not been reassured. On 6 January 2025, the Federation of Small Businesses (FSB) published the results of a member survey indicating that the proposed removal of the qualifying period was a top concern.
Many smaller employers warned that the change could lead them to reduce headcount, delay or cancel growth plans, and adopt a more risk-averse approach to recruitment, particularly when considering candidates with less stable work histories. This would understandably have a knock-on effect on the economy.
The draft Employment Rights Bill, published shortly after Labour came into power, included the proposed “day one” unfair dismissal protection, signalling the government’s intention to follow through. However, when the Bill reached the House of Lords in July 2025, it faced resistance.
House of Lords Amendment
Lord Sharpe of Epsom proposed an amendment to replace the removal of the qualifying period with a reduced threshold of six months’ service. In his remarks to the House, he stated:
“The Government’s intention to protect workers is commendable. We all agree that fairness, dignity and security at work are essential pillars of a just society. However, the approach taken in this Bill, particularly the changes to unfair dismissal rights and the introduction of a statutory probationary period, is confused and counterproductive.”
The House of Lords supported this amendment, and the bill has now returned to the House of Commons for reconsideration.
Potential Impact on Employees
Day-one rights would have been ideal for employees; However, a reduced threshold, on paper, does seem better than having to wait two years to bring a claim. Bear in mind, unfair dismissal claims where an employee has been dismissed due to maternity, whistleblowing, etc, will be considered “automatically unfair”. In such situations, employees can bring an unfair dismissal claim from day one in any event.
While having such protection from six months of employment can be considered an improvement from having no protection at all, it may still leave employees feeling vulnerable for the first six months of a new role.
Implications for Employers
For many employers, the amendment by the House of Lords is a welcome compromise. A six-month qualifying period provides a realistic timeframe to assess the suitability and performance of new hires, while still enhancing early stage protections for employees compared to the current two-year threshold.
Businesses should, however, begin reviewing and formalising their probationary policies to ensure they are clear, fair, and consistently applied. If the proposed six-month qualifying period is retained, employers will need robust systems in place to monitor and document employee performance during this initial period.
Importantly, if concerns are not identified and addressed within the six months, the employee will gain full unfair dismissal protection, potentially leaving the employer exposed should performance issues arise thereafter. A lack of timely action could undermine the employer’s ability to defend future claims, even where genuine concerns exist.
In addition, it will be essential to provide training for all managers involved in staff supervision, ensuring they are fully familiar with the organisation’s performance management procedures and the Acas Code of Practice on disciplinary and dismissal processes. Equipping line managers with the knowledge and tools to identify and address issues early, particularly within the probationary or qualifying period, will be key to mitigating risk and maintaining fair, consistent practices across the business.
While recent amendments mark an important development, the amendments proposed are still being considered, and the bill may undergo further changes. Businesses should continue to prepare for any eventual legal and operational impacts.
