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Yesterday evening (27 November) the Government announced it had reached an agreement with union and business representatives to retain a six month qualifying period for unfair dismissal rights (reduced from the current two year requirement, and presumably dropping the proposal for a statutory probationary period). This concession has been made in order to ensure that the Employment Rights Bill can proceed to Royal Assent and enable other changes to be implemented in accordance with the timeline in the government's roadmap (and, in particular, day one rights to statutory sick pay and paternity leave in April 2026 and launching the Fair Work Agency). The Government also confirmed that the change will be made in primary legislation (so that the qualifying period cannot be quickly changed again simply by secondary legislation), and that "the compensation cap will be lifted". Currently compensation for ordinary unfair dismissal is subject to a dual cap of 52 weeks' pay and a total sum fixed annually (currently £118,223). The Government's statement gives no further details as to what it means by lifting the cap, but reports from business representatives participating in the discussions suggest that the intention is to remove the 52 weeks' pay cap; the overall cash limit would be retained (although it is possible this might also be increased - and of course it is uprated in line with inflation annually anyway).
The Government's intention will only be confirmed formally once the amendments to the Bill are published. The Bill is now scheduled to return to the Commons on 8 December 2025 and the Lords on 10 December 2025. The Government will presumably be hoping its concession is enough to get the Bill approved in both Houses before the Christmas recess. Given the less than wholly positive response from unions such as Unite, and reports that Angela Rayner and other backbench MPs may be considering opposing the change, this is by no means a foregone conclusion; it would also require the House of Lords to concede on its other objections to the zero hours reforms and certain union law changes.
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