Ministers have secured agreement with trade unions and employer groups to amend the unfair dismissal provisions in the Employment Rights Bill. The Government will support a six‑month qualifying period, replacing the current two‑year rule, to keep the Bill on course for Royal Assent and preserve the wider delivery timetable for reforms. The package also reaffirms April 2026 for day‑one statutory sick pay and paternity leave, and the launch of the Fair Work Agency.
The legislation remains in the final stages of parliamentary scrutiny. The House of Lords confirmed on 18 November that ‘ping pong’ with the Commons is under way, with the unfair dismissal threshold among the issues shaping agreement between the two Houses. Earlier Commons Library briefings set out how the Bill moved from Commons completion in March to Lords third reading on 3 September, before returning to the Commons for consideration of Lords amendments.
Under the compromise, protection against discrimination and for automatically unfair reasons continues to apply from day one of employment. The Government will also legislate so the qualifying period for ordinary unfair dismissal can only be changed by primary legislation, and it has committed to lift the compensation cap, with the detail to be set in the Bill and subsequent commencement regulations.
Implementation remains phased. The Government’s July roadmap schedules day‑one rights to sick pay and paternity/parental leave for April 2026, alongside the establishment of the Fair Work Agency. Other measures follow through 2026–27, with formal consultations and secondary legislation to define operational detail and lead‑in periods.
Enforcement capacity is being rebuilt in parallel. Matthew Taylor has been appointed as the first chair of the Fair Work Agency, due to open in April 2026, bringing together state enforcement functions with investigatory powers and civil penalties to improve compliance. Practitioner briefings indicate the agency will consolidate wage, holiday pay and agency enforcement into a single body.
For employers, a six‑month threshold alters people‑management timelines. Probation policies, performance reviews and documentation practices will need to reflect the new point at which ordinary unfair dismissal protection starts, while retaining day‑one safeguards against discrimination and automatically unfair dismissal. Government has signalled further consultation on how secondary legislation will operate in practice.
Removing the compensation cap would represent a material change to potential liability for ordinary unfair dismissal. Current tribunal limits, uprated on 6 April 2025, set the compensatory award at the lower of 52 weeks’ pay or £118,223, with separate rules for the basic award. Employers should factor possible changes into budgeting once final text and commencement dates are confirmed.
Reporting indicates the compromise has unlocked progress. Business groups have welcomed clarity around a six‑month rule, while unions have prioritised passage of the Bill to secure day‑one sick pay and parental leave, despite earlier calls for day‑one unfair dismissal rights. These positions reflect a negotiated settlement to avoid wider delays.
Next steps centre on completing Commons–Lords exchanges and laying the secondary legislation needed for staged commencement. The Government has committed to a full, fair and transparent process for consultation on the detail and application of regulations, with April 2026 remaining the anchor date for first‑wave measures and the new enforcement body.
Small businesses are flagged for targeted support as guidance, codes and commencement dates are finalised. Officials have emphasised continued engagement with employers and unions during and after passage to support effective adoption, giving organisations time to plan workforce policies and HR systems ahead of the 2026 start dates.