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There has finally been a breakthrough in the deadlock surrounding the Government's Employment Rights Bill ("ERB"), which has been the subject of significant back-and-forth between the House of Commons and the House of Lords in recent weeks. In particular, there has been much debate around the qualifying period for unfair dismissal claims but it now appears that a compromise has been reached to enable the ERB to pass without further undue delay.
Reduction in the unfair dismissal qualifying period
Currently, an employee must have two years of continuous service with an employer to be eligible to bring an unfair dismissal claim. Indeed, this two-year qualification period has been in place since 2012 and before then, it was one year. So, the proposal to change this was a huge change. The Government had pledged to abolish this requirement and make unfair dismissal a "day one" right from the commencement of the employment, subject to the successful completion of a statutory probationary period.
But when the Bill reached the House of Lords, an amendment was proposed to this "day one" right to give employers some protection. The House of Lords took the stance that six months would be more reasonable, hoping to achieve a balance for employees and employers but it was hoped that this will give businesses some protection.
The Government initially resisted this change, as it would represent a U-turn on its manifesto commitment, but has now accepted the amendment in the interest of progressing the Bill.
Potential removal or increase to the cap on compensation for unfair dismissal
In addition to the reduced qualifying period, the Government has hinted that it may scrap or significantly increase the current cap on unfair dismissal compensation, which is presently set at the lower of 52 weeks' salary or £118,223.00. Further detail is expected to be released in the coming weeks.
Implications for employers
These changes are significant and will all require employers to review their practices, particularly around the probationary period, the record keeping and monitoring of that and performance management especially in those first six months. Shorter qualifying periods and the potential for higher compensation awards may increase the risks associated with dismissals and heighten the importance of early and consistent HR processes.
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