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The government has announced plans to introduce stronger protections against unfair dismissal starting in early 2027, following a recent scaling back of its initial proposals. A key change is the establishment of a six-month qualifying period before employees can file claims for unfair dismissal, replacing the previously proposed immediate eligibility from day one of employment. This adjustment came after concerns raised by business groups but still represents a significant reduction from the current requirement of two continuous years in a job.
Although the exact timing was unclear at the time of the initial announcement, ministers are now expected to confirm that these protections will come into effect from 1 January 2027, when the relevant legislation returns to the House of Commons. While such a statement from the government is not legally binding, it carries considerable political significance for lawmakers. The update follows consultations involving key figures such as former deputy Prime Minister Angela Rayner and former employment minister Justin Madders, both instrumental in designing the original proposals. Rayner has since withdrawn her plan to introduce the change in 2026, expressing approval of the 2027 implementation date on social media, noting it will deliver “real change for workers.”
Previously, Labour had intended to eliminate the qualifying period entirely and introduce a new legal probation period, likely up to nine months, as a compromise to protect employers. However, after discussions with unions and business representatives, the revised plan abandons the idea of a probation period and sets the qualifying window at six months instead. This reversal has been praised by business groups concerned that the original approach might deter hiring, but it has drawn criticism from some left-wing Labour MPs and the Unite union, which is a significant party donor through affiliation fees. Meanwhile, the government continues with its plans to introduce enhanced day-one benefits such as paid sick leave and paternity rights from April 2026.
In a separate but related development, the government is poised to remove existing caps on compensation awarded in ordinary unfair dismissal cases. Currently, financial awards are capped at either the employee’s annual salary or £118,223, whichever is lower. The proposed change, which will be incorporated into the employment rights bill as it nears final approval in Parliament, will align compensation for ordinary dismissal claims with those for automatic unfair dismissals, where no such caps exist. Notably, this proposal was not included in the original bill unveiled last October nor in Labour’s general election manifesto but emerged as part of recent negotiations between unions and industry groups aiming to find common ground
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