Employment Rights Bill: Government U-turn on day 1 unfair dismissal rights

Pressure builds to keep the Bill on track

The Employment Rights Bill is a flagship piece of legislation, billed as the biggest overhaul of workers’ rights in a generation. Despite strong government backing, the Bill stalled in the House of Lords, where peers repeatedly resisted key elements of the package. 

Although the government could ultimately force the Bill through, doing so would significantly delay implementation. To break the impasse and keep the Bill moving, ministers have now agreed a major compromise and policy shift on unfair dismissal rights.

The compromise on unfair dismissal rights 

Following weeks of parliamentary ping-pong, the government has reached a compromise by reducing the unfair dismissal qualifying period from 24 months to six months, stepping back from its original commitment to day one protection. Ministers present this shift as a way to extend meaningful rights to millions of workers while addressing business concerns.

As part of the agreement, the government has also committed that any future change to the qualifying period will require primary legislation, providing greater certainty for employers. In addition, it has pledged to remove the statutory compensation cap for unfair dismissal, although the detail and timing of that reform have not yet been confirmed.

What happens next? 

At the time of writing, the government has confirmed the move to a six-month qualifying period, but the amendments needed to give effect to this change have not yet been published. Until those amendments are tabled, the full scope of the revised approach cannot be confirmed. This includes the Government’s commitments that any future change to the qualifying period will require primary legislation and that the statutory compensation cap will be lifted. There are also unconfirmed reports that the proposed nine-month statutory probationary period (the Initial Period of Employment) may be dropped, but this has not yet been confirmed.

The House of Commons will vote on the proposed amendments on 8 December 2025. If both Houses reach agreement before Parliament breaks for the holiday period on 18 December, the Bill could receive Royal Assent in time to become the Employment Rights Act 2025 rather than 2026. 

What about the remaining Lords sticking points?

It is not yet clear whether this concession will be enough to secure the Bill’s passage. Several Lords amendments remain unresolved, including proposals on a guaranteed hours offer opt-out mechanism, the definition of seasonal work, active opt-in to political funds for new union members, and retention of the 50% turnout threshold for industrial action ballots.

However, the six-month qualifying period was the major point of difference between the two Houses. With that issue now resolved, this may give the Lords sufficient reassurance to step back from their remaining amendments and allow the Bill to proceed.

Learning points 

The Government’s shift on unfair dismissal rights is clearly designed to break the parliamentary deadlock and keep the Employment Rights Bill on schedule. With the Christmas recess approaching, this compromise may provide the momentum needed for both Houses to reach agreement.

While the Bill’s final shape will only become clear once the Government tables the necessary amendments, Royal Assent now feels closer than at any point in recent weeks. All eyes will be on 8 December to see whether this is the step that finally moves the Employment Rights Bill across the line.

For more information or advice, please contact Jessica Scott-Dye in our Employment team.