Government U-turn on day-one unfair dismissal rights

Day-one unfair dismissal rights U-turn

Yesterday, the Government confirmed they were backing down on their plans to introduce day-one rights to claim unfair dismissal and would instead agree to the House of Lords’ amendment to the Employment Rights Bill which would see the current two years’ service requirement reduced to six months.  

As part of the deal, the Government have announced that the compensation cap on unfair dismissal claims will be lifted. There’s some uncertainty around what this will mean. Currently unfair dismissal compensation is capped at the lower of 52 weeks’ gross pay or £118,223. It’s rumoured that the Government intends to remove the 52 weeks cap but keep the £118,223 maximum award limit. We’re waiting to see the amended wording to the Bill which should clarify this.  

The Government will also make it more difficult to change the service requirement in the future by providing that this can only be done by an act of Parliament (rather than by regulation). 

Where the Bill is currently at  

On 17 November the Bill failed to get through the Lords once again. It was clear that if they couldn’t reach a compromise shortly then the Government’s timetable for implementation of the Bill’s reforms would be in jeopardy.  

Zero hours contracts  

Another key point of dispute relates to zero hours contracts. As it stands, the Bill requires employers to continue to offer a guaranteed hours contract every time there has been a certain pattern of work over a relevant period (likely to be 12 weeks), despite it having been refused previously.  

The Lords are concerned about the administrative burden on employers, especially small businesses, and were insisting on an amendment to allow zero-hours workers to be able to opt-out of having to be offered repeated guaranteed hours contracts if they’ve refused the opportunity to be offered it once before (with the ability to opt in at a later date).  

What happens next  

The Bill will now come back to the House of Commons on 8 December and is expected to become law before Christmas.  

Stay updated with Citation  

We’re keeping a close eye on developments and will be sending out a comprehensive guide to the Bill as soon as it passes.  

For advice or guidance regarding what we know so far, give us a call on 0345 844 4848*

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