Focus on…. Unfair Dismissal and Probation Periods
One of the cornerstones of Labour’s new Employment Rights Bill is to grant employees protection from unfair dismissal from the first day they start work, rather than requiring a minimum two years’ continuous service as at present.
This is undoubtedly a massive change, with the Government estimating that it will provide unfair dismissal rights to an additional 9 million employees, thereby significantly increasing the potential for Employment Tribunal claims.
This week we ask: how will it work? what are the implications? and what is the positive news for employers?
Businesses have understandably pushed back on the need for a minimum probation period to allow time to properly assess the conduct and performance of new recruits, without the risk of litigation if they haven’t made the right appointment. The Government has conceded to this, and the bill introduced the concept of an ‘initial period of employment’ (i.e. a probation period), albeit the jury is still out on whether this will be for 6 or 9 months.
Unfortunately, the Bill currently lacks any detail as to how this initial period of employment might work in practice – that will be left to subordinate regulations introduced after further consultation. Several options have been discussed, including a ‘light touch’ dismissal procedure for employees within probation (those who have been engaged in HR practice for a while may recall the ‘3 step’ statutory dismissal procedure abolished in 2009), or capping the compensation available for a probation-dismissal at a lower level.
Interestingly, the Bill specifically excludes redundancy from consideration under the light touch approach. This implies that employees will be afforded the full protection of unfair dismissal rights from day one in relation to any proposed dismissal on grounds of redundancy.
Practical implications
Adopting a simplified dismissal procedure will only protect employers from challenges to the procedural fairness of a dismissal. It looks likely that employers will still have to show that the underlying reason was sufficiently serious to justify dismissal i.e. that the decision fell within a range of ‘reasonable responses’. And that means gathering evidence.
In our experience, probation reviews are an under-utilised tool, frequently incorporated in employment contracts, but often overlooked in practice. Part of the reason for this is that the existing service requirement for unfair dismissal gives employers plenty of comfort, knowing that a conduct or performance-based dismissal within the first two years does not need to be supported by much in the way of substantive evidence. Employers merely need to show that the decision is not discriminatory or linked to whistleblowing (or a small category of automatically unfair reasons). Under the new law, however, probation reviews will take on renewed importance, creating an invaluable paper trail to support any decision to dismiss.
The good news is that the Government is not aiming to implement the new rules until at least Autumn 2026, so you have a full two years to prepare. As and when more details are published, TJD Law can assist with tailoring new probation-based disciplinary procedures to address these situations and mitigate the risks.
The Silver Lining?
So what’s the positive news for employers? Well at present, it is undeniable that there exists a certain type of Tribunal claim that has rather questionable merits. These are employees who feel, often with good cause, that they have been treated unfairly, but do not have sufficient service to claim ordinary unfair dismissal. Consequently, in pursuit of justice, they attempt to shoehorn the facts of their dispute into a discrimination or whistleblowing claim, neither of which require a minimum period of service. The result is that, rather than having an honest and straightforward dispute about the fairness of their dismissal, the litigation becomes much more complex and disingenuous. These claims also take much longer and cost more money – with very limited scope for the employer to have the claim struck out early through lack of merit.
So, whilst the new rules may result in more unfair dismissal claims, they might also lead to a reduction in speculative and more onerous discrimination and whistleblowing claims, as employees will now have a more appropriate form of remedy.