Employment Rights Bill | Unfair Dismissal

Employment law changes will give employees the right to claim unfair dismissal from six months in, removing the two-year qualifying period.

Last updated: 15th December 2025

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The two-year qualifying service requirement for making a claim for unfair dismissal* will be removed, and employees will have the right not to be unfairly dismissed from six months in. However, employers will still be able to dismiss fairly during an “initial period of employment”, i.e. a probationary period (likely to be limited to nine months in length, although this is subject to consultation), by following a shorter, light-touch process (to be confirmed).

Only employees who have started employment will have the right to claim unfair dismissal.

This will likely include a meeting with the employee to explain the concerns and offer them the right to be accompanied, prior to dismissal. Employers will only be able to fairly dismiss in this manner, where the reason for dismissal is conduct, performance, a statutory restriction, or SOSR (where the reason relates to the employee, not to change their terms and conditions) – but not redundancy.

One slight complicating factor during the House of Lords Report Stage was that the opposition amendment, which has stipulated that the current qualifying service requirement for unfair dismissal would simply be reduced from two years to six months, was accepted after a vote in the House of Lords.

UPDATE - December 2025

Read the 'Simple Checklist' to get ready for the changes on Unfaor Dismissal here.

On 27 November 2025, in the face of increasing pressure from business leaders and the House of Lords, the government announced they were abandoning their proposal to give day-one unfair dismissal rights that was in the Employment Rights Bill (ERB) in order to get the rest of the Bill passed.  The compromise, backed by unions and businesses, is for a six month qualifying period instead of the current two year period.  Future governments will find this hard to change as the government intend to do this via an Act of Parliament rather than by regulations.

This won’t change the position for cases where no qualifying period is required – e.g. discrimination, claims about statutory rights such as the right to holidays or a payslip, or health and safety or whistleblowing claims, so it is always important to take advice from the Bira Legal advisory team before any dismissal, but it is great news for employers who will be able to use those first six months to assess competency and attitude. 

The law will take some time to progress through the normal channels, so we don’t know when this change will actually take place, but it is likely to be April or October 2026. 

The same press release announced that “the compensation cap will be lifted” although no further details were given.  However, in the past few days we have learned that unfair dismissal compensatory awards will be uncapped if it passes the House of Lords. While the vast majority of unfair dismissal claims never get close to the cap (currently £118, 223), it will likely mean that the already overburdened tribunal system will become even more clogged with tribunals for very high earners.

UPDATE - October 2025

On 15 September 2025, the House of Commons reviewed the changes made by the House of Lords, ultimately rejecting most of the non-government amendments put forward at the Lords’ Report Stage. This included rejecting the proposal to simply reduce the qualifying service to raise a claim for unfair dismissal from 2 years to 6 months.

What happens next?

Ministers will now explain to the Lords why their amendments were rejected. The Lords are due to review these explanations and the Commons’ proposed changes on 28 October 2025. If they accept the revisions, the Bill should be granted Royal Assent soon afterwards, completing its passage.

The regulations still need to be drafted, and the government has indicated there will be extensive consultation on the reforms. This will cover the duration of the initial period, the compensation framework, and the procedures for dismissal during this time—including how these processes relate to the Acas Code.

According to the current roadmap, these changes to unfair dismissal rights are scheduled to come into effect in 2027.

*Any dismissal linked to an automatically unfair reason does not require two years of continuous service to make a claim.