Shorter probationary periods could help avoid unfair dismissal claims

Under current legislation, an employee must have two years’ service at the date of termination of their employment before they can bring a claim for unfair dismissal. Labour’s landmark Employment Rights Bill proposed to remove this qualifying period and replace it with a day one right to unfair dismissal protection (coupled with statutory probationary period).

The Labour government has faced significant scrutiny over the proposal and has struggled to get its Employment Rights Bill passed by the House of Lords.

It is now proposed that employees will need six months’ continuous employment before they can bring a claim.

It is thought that this concession by the government is set to resolve the House of Lords’ objections to the day-one rights – which is one of its primary objections to the Bill – while also addressing concerns raised by business groups that introducing the right from day one would discourage companies from hiring.

This will be done by primary legislation, not by amending the qualifying period in s.108 of the Employment Rights Act. Therefore any future changes to the six-month qualifying period will require to be amended via primary legislation.

There are also set to be changes to the compensation cap for unfair dismissal claims, but we’re yet to see exactly what form this will take: a complete scrap of the cap so awards could be unlimited, or one of the two existing caps (a year’s salary, or £118,223) being removed.

The reduction in the qualifying period to claim unfair dismissal from two years to six months is still a significant change. However, it does offer employers slightly more flexibility to properly assess a new hire’s performance and has been deemed a “workable package” by industries such as hospitality, which has publicly backed the U-turn.

It will be imperative for employers to be proactive and ensure that they have robust recruitment and probationary policies in place to ensure that any issues with a new hire are properly considered and addressed in the six-month window.

The Bill is due to return to the House of Commons for consideration of these changes today before being passed back to the House of Lords. And while it is still to be passed, we are encouraging clients to review their policies now in preparation for it coming into force.

Employers must bear in mind that once an employee has worked for one month, they must receive at least one week’s notice. When an employer dismisses an employee without providing the statutory minimum notice, the effective date of termination is extended as if the statutory notice had been given. This effectively means that if an employer dismisses an employee without notice three days before their probationary period ends, they could bring an unfair dismissal claim.

Our advice to employers is to reduce their probationary period to five months to avoid missing the deadline.

Robyn Black is a Solicitor within WJM’s Conflict Resolution Group, assisting on a wide range of general litigation and employment law matters