The government announced yesterday that the qualifying period for “ordinary” unfair dismissal claims would be reduced to six months (from two years) rather than being removed entirely. There will continue to be no qualifying period of service needed to bring certain claims for automatic unfair dismissal. 

This announcement was unexpected and represents a significant concession by the government, as the introduction of “day one” unfair dismissal rights had been one of their key manifesto commitments. It appears to be a pragmatic decision - the passage of the Employment Rights Bill has been repeatedly held up by the House of Lords insisting that (among other things) a qualifying period be preserved. This has prompted concern that implementation of all of the changes made by the Bill would be pushed back, resulting in the government deciding to, in its words, “move forward on the issue of unfair dismissal protections in the Employment Rights Bill to ensure it can reach Royal Assent and keep to the government’s published delivery timeline”.

Also unexpected was the announcement that “the government has committed to ensure that […] the compensation cap will be lifted". No further detail was given, and so it is unclear exactly what this means. The current cap on compensation for unfair dismissal is £118,223 or 52 weeks’ gross actual pay at the time of dismissal, whichever is lower. The changes may apply to either or both of these thresholds, with some commentators suggesting today that only the 52 week limit will be removed. 

As with so much on the Employment Rights Bill, then, organisations and employees should watch this space. Earlier this week Peter Kyle, the business secretary, said that 26 consultations on the Bill’s provisions would be held after it receives Royal Assent. As we have highlighted before, much of the key detail of those provisions has yet to be worked out, and a significant number of further regulations have to be made before they can come into force. All of this will have a real effect on the final impact of the Bill. 

An update on the Employment Rights Bill - GOV.UK

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