Since their election success, all eyes have been on Labour's proposed employment law reforms. One of the most far-reaching would be the proposed abolition of the two-year qualifying period for unfair dismissal claims.
Our Employment Law Partner, Natalie Abbott, considers the possible watering down of this piece of legislative reform following a recent House of Lords vote.
What is the qualifying period?
Under the Employment Rights Act 1996, an employee needs two years of continuous service to bring a claim for unfair dismissal. There are some exceptions to this (e.g. dismissals related to whistleblowing, discrimination or trade union activities). But for many would-be claimants, the two-year threshold is a significant barrier to challenging their dismissal at tribunal.
The qualifying period is intended to strike a balance between giving employees flexibility and protecting employees from losing their jobs without good reason. Critics of the qualifying period have long argued that it disproportionately affects workers in minority groups and those in more precarious employment, reducing job security and creating an unjust labour market.
One of Labour's flagship policies has been the removal of the qualifying period, granting all employees protection from unfair dismissal from their first day of employment.
What is the significance of the House of Lords vote?
The House of Lords have voted against the removal of the qualifying period, instead amending the Employment Rights Bill to allow for a qualifying period of six months. They argue that this provides a more balanced approach between the needs of business and the rights of employees.
The Employment Rights Bill also introduced an "initial period of employment", thought to be nine months, during which a simplified process could be used to dismiss staff. The Lords viewed this proposal as causing unnecessary confusion, which could be avoided by reducing the qualifying period to six months instead of removing it entirely.
The government is expected to push back against this amendment, with "day one" protection having been a key part of their manifesto. The Bill will now pass back between the House of Commons and the House of Lords until agreement is reached.
What should employers do now?
Even though the details of any change to the qualifying period remain uncertain, reform will follow – whether it is a reduction to six months or a day-one qualifying period. The impact of this on business can be mitigated by taking proactive steps now to review internal processes and policies.
Employers are advised to:
- ensure there are robust disciplinary and performance management processes in place
- review employment contracts, handbooks and HR policies to ensure they are up to date
- review any probationary period processes and ensure contracts allow for a probationary period when taking on a new employee
- keep early-stage documentation around any employee issues, including during the probationary period
- provide managers and HR teams with updated training on handling dismissals fairly and consistently to reduce the risk of claims
- seek legal advice before terminating any employment relationship
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
