3 days Ago By William McParland
The Employment Rights Bill was introduced to the UK Parliament in October 2024, during the early months of the new Labour Government. It was described at the time as “the biggest upgrade to workers’ rights in a generation”. Since then, the Bill has moved through the House of Commons and has now reached the House of Lords for further debate.
Its scope is wide-ranging, addressing, inter alia, exploitative zero hours contracts, “fire and rehire” practices, and introducing new “day one” rights for unfair dismissal and family-friendly protections. Two proposals stand out..
.. Day One Right to Unfair Dismissal One of the Bill’s most significant changes is the proposed repeal of the current two-year qualifying period for ordinary unfair dismissal, in effect making it a right from day one.
This right, however, is subject to an ‘initial period of employment’ essentially a statutory probation period. The Government has indicated this period will be nine months. During this time, a ‘lighter touch’ unfair dismissal test will apply, though the details of what this means in practice remain unclear.
It’s unknown how this modified test will interact with the ACAS Code of Practice on Disciplinary and Grievance Procedures and/or how compensation will be handled for claims arising during probation. The nine-month threshold appears to be a concession to employers, but the precise nature of the ‘lighter touch’ test and how it differs from the established test under section 98(4) of the Employment Rights Act 1996 has yet to be confirmed. Still, this proposed change is welcomed.
It directly addresses a common issue: many employees dismissed before hitting the two-year mark currently have no right to bring an unfair dismissal claim. That gap leaves thousands without a legal remedy. With this reform, the number of employees eligible to bring unfair dismissal claims to Tribunal will significantly increase.
Similarly, the proposal to extend the time limit for bringing Employment Tribunal claims from three months to six will likely result in more claims being pursued, giving workers a more realistic window to seek advice and act. Fire and Rehire (or Replace) Another key reform concerns “fire and rehire” or “fire and replace” tactics. Under the Bill, a dismissal will be automatically unfair if the reason or principal reason was the employee’s refusal to accept changes to their employment contract.
However, the Bill creates an exception where the employer can demonstrate that the proposed changes were necessary due to “financial difficulties” that impacted their ability to continue trading, and that no reasonable alternative was available. This exception may in effect prohibit fire and rehire, particularly in the public sector, where claiming near-bankruptcy would likely be unsustainable. Even in the private sector, employers may hesitate to openly admit financial crisis for fear of accelerating it through public disclosure.
The Bill also introduces a more detailed fairness test, one that considers whether the employer consulted with affected staff or representatives, moving away from the simpler “business reason” test currently in place. Looking ahead, Royal Assent for the Bill is anticipated by July. While some measures may come into force later this year, key provisions - especially those relating to unfair dismissal - are not expected until 2026.
Whether you believe the Bill goes too far or not far enough, few would argue against its significance. This is, undoubtedly, the most substantial shift in UK employment rights in decades. William McParland is a Partner, Thompsons Solicitors Scotland.
