Government U-Turn on Day-One Unfair Dismissal Rights – What SMEs Need to Know
The Government has announced a significant U-turn on its proposal to introduce day-one unfair dismissal rights under the Employment Rights Bill.
Originally, employees would have been able to claim unfair dismissal from their first day of employment, removing the long-standing two-year qualifying period. Following strong resistance from employer groups—particularly SMEs—the proposal has now been dropped.
This reversal is not entirely surprising. The qualifying period has previously been set at six months (in the 1970s), so there is precedent for a shorter timeframe. Commentators predict this move signals further legislative changes in 2026, giving businesses a clear focus to prepare for what’s next.
What stays the same and what changes?
Employees will currently still need two years’ continuous service to claim ordinary unfair dismissal, giving SMEs breathing room to maintain fair but streamlined processes during probation. But it is likely that the legislative change to bring in a reduced qualifying period of six months will now happen reasonably quickly in 2026.
The day-one rights—such as statutory sick pay and parental leave—are expected to progress from April 2026.
Why does this matter for SMEs?
While the U-turn removes immediate risk, the Employment Rights Bill remains the most significant overhaul of UK employment law in decades. Future reforms, including zero-hours contract changes, predictable working patterns, and expanded family rights, will reshape how businesses hire and manage staff. It’s a really good time to review what you are doing to ensure you are prepared for the changes.
Act now to stay ahead
Delaying updates can lead to costly mistakes—non-compliance risks tribunal claims, reputational damage, and unnecessary legal fees. Acting early means you stay ahead of the curve, protect your business, and avoid last-minute panic when changes take effect.
Why not book a Compliance Review Session with our HR team to ensure your contracts, onboarding processes, and policies are ready for the upcoming changes.
Contact us today to schedule your review at hello@effective-hrm.co.uk