How will day-one unfair dismissal rights affect my business?

One of the most significant reforms under the Employment Rights Bill will be the introduction of day-one unfair dismissal protection for all employees. This represents a fundamental shift in UK employment law and will have wide ranging implications for how employers manage recruitment, probationary periods, and early dismissals.

At present, employees must have two years’ continuous service before they can claim unfair dismissal (except in certain cases, such as discrimination or whistleblowing). The Bill removes that requirement. As soon as the legislation comes into force in 2027, all employees will be protected from unfair dismissal from the very first day of employment.

The Bill makes clear that the qualifying period for unfair dismissal will be abolished. Employees will be able to bring a claim from day one. However, we are still awaiting government guidance on how tribunals will apply these rights in practice, including how they will handle dismissals made within the first weeks or months of employment. It remains to be seen whether some form of tribunal ‘filtering’ will develop to distinguish genuine disputes from vexatious claims.

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Probationary Periods

Some employers may assume probationary periods will lose their value once day-one unfair dismissal rights take effect. In fact, the opposite is true.

Probationary clauses will remain a vital management tool, but their effectiveness will depend on being properly drafted and applied. The Bill introduces a statutory probationary period, expected to be set at up to nine months. Employers should, therefore, ensure contracts contain a clear probationary period (with the option to extend) and link this to regular review meetings.

What will change is that dismissals during probation will still need to follow a fair process. Employers will need to:

– Set clear expectations at the start

– Document any issues during probation

– Hold a fair meeting before deciding on dismissal.

Tip: Review your standard contracts now to ensure probationary clauses are included and fit for purpose. Train managers to follow a proper process during probation and to keep records. This will give employers the best chance of showing that any early dismissal was fair and reasonable.

Recruitment and Onboarding

With unfair dismissal rights applying from the outset, recruitment decisions will carry greater legal risk. Employers will need to be confident that their recruitment processes are robust, fair, and non-discriminatory. Careful candidate selection, thorough referencing, and clear job descriptions will become even more important.

Tip: Ensure managers are trained in fair recruitment practices and that selection decisions are well-documented. Consider adding a “pre-employment checklist” to capture reasons for hiring and expectations for performance.

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Litigation Risk

Employers may face an increase in employment tribunal claims once day-one rights take effect. Even unsuccessful claims will create increased costs and management time. While some employers may fear an explosion of litigation, much will depend on how tribunals balance the new law with business realities.

Tip: Introduce clear internal processes for handling performance or conduct issues from the start of employment. Having policies in place and demonstrating a fair approach will help reduce the risk of claims.

Next Steps for Employers

Although these reforms will not come into force until 2027, employers should begin preparing now by:

• Auditing contracts of employment and probationary clauses
• Training managers on handling dismissals fairly from day one
• Reviewing recruitment processes and ensuring decisions are documented
• Putting in place systems for documenting and managing early performance issues.

Conclusion

Day-one unfair dismissal protection is a game changing development in UK employment law. Employers will no longer have a ‘safe period’ for early dismissals and every decision to terminate employment will need to be justified and procedurally fair.

The key to managing risk will be preparation: updating contracts, tightening recruitment, and ensuring managers are trained to handle probationary periods properly.  Employers who act now will be in a much stronger position to adapt when the reforms take effect.

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This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.