The Employment Rights Bill failed to clear the final stage of its passage through Parliament last night. The House of Lords chose to insist on a number of amendments that had been rejected by the Commons meaning that the Bill must now go back to the Commons to see if they insist on rejecting the amendments that the Lords are insisting on – or whether some sort of alternative amendment (referred to as an amendment in lieu) can be made that the House of Lords could live with.  For obvious reasons, this stage of the process is known as ‘ping-pong’.

In this post I want to concentrate on the amendment concerning the unfair dismissal qualifying period – where the Lords have insisted on a six month qualifying period rather than allowing unfair dismissal to be a ‘day-one right’. It struck me, watching the debate, that the Government has got itself into a bit of a mess. 

The current position – understood by everyone with any involvement in employment law – is that in order to claim unfair dismissal an employee must have two years’ continuous service with their employer (I’m just going to ignore the lack of a qualifying period for ‘automatic’ unfair dismissals for reasons such as whistleblowing or belonging to a trade union). That requirement is found in S.108(1) of the Employment Rights Act 1996. Importantly the two year qualifying period can be amended (or scrapped) by Regulations under S.209 of that Act. So when the coalition government of 2010-2015 wanted to increase the qualifying period from one year to two years back in 2012 it did not need to get a Bill through Parliament to do that, it simply issued an Order which took effect after a single resolution in each House of Parliament. 

Labour’s 2024 manifesto was very clear. It committed the new Government to:

introducing basic rights from day one to parental leave, sick pay, and protection from unfair dismissal. 

It is important to remember in all this that the total abolition of the qualifying period for unfair dismissal is an unequivocal manifesto commitment on which all Labour MP’s stood at the last election. It cannot be abandoned lightly. 

Making this change would not need primary legislation – it could be done using the same sort of Order that was used to increase the qualifying period back in 2012. Given it was a manifesto commitment, it is difficult to see how that could be opposed in the House of Lords. 

But the Employment Rights Bill went further than just disapplying the qualifying period – it repealed S.108 altogether and removed any reference to it from S.209. This would mean that a future Government could not simply reintroduce it with an order of its own – a fresh Act of Parliament would be required. 

In order to try to reassure employers, however, the Government provided for special rules to apply during an ‘initial period of employment’. The details are to be worked out after consultation which means that the Government is currently unable to explain how this would work in practice. I think it is a needless complication. Indeed when I considered the option of something like this before the Bill was published, I said it would be an ‘abomination’ and that I would stand outside Parliament with a loudspeaker protesting about it. Please don’t hold me to that. 

Business was not however reassured and just last week the Resolution Foundation published an article entitled ‘Day One Frights’ (well done) which said that the total abolition of the qualifying period would have the potential to inhibit hiring and could be particularly damaging to younger workers looking for their first role. It really is a very cogently argued piece and is well worth reading. The conclusion was that the qualifying period should be reduced to six months. 

As it happens, that mirrors an amendment made by the House of Lords at the Report stage and which was rejected by the Commons when it considered the Lords amendments in September. When the issue came back to the Lords to be debated yesterday the Government frontbenchers really struggled to make a coherent case – it was quite painful to watch. The Resolution Foundation’s position was referred to time and again by the Opposition and the Government seemed to have no answer to it. Of course they weren’t helped by the fact that the ministerial team was new to the issue following the reshuffle back in September.

Breaking the deadlock

So what is the Government to do? It surely can’t abandon such a clear manifesto commitment? Here is my suggestion. 

Why not accept a six-month qualifying period – for now – and pledge to work towards a total abolition in the future?  That means replacing the current House of Lords amendment (which has some technical issues and which currently – and bafflingly – has the ‘initial period employment’ beginning at the end of the first six months of employment) with something much shorter and cleaner which would: 

• Keep S.108(1) in place but specify a qualifying period of six months

• Provide that there will be no qualifying period where the dismissal was due to a spent conviction within the meaning of the Rehabilitation of Offenders Act 1974 (this was inserted in the Bill by the House of Lords and is so obviously a good idea that it is rather surprising that it is not already in the Employment Rights Act)

• Scrap all references in the Bill to special rules applying during an ‘initial period of employment’ and save us all a lot of needless hassle 

• Keep the ability under S.209 of the Employment Rights Act 1996 to amend or disapply the qualifying period for unfair dismissal in the future. 

The Government could then make it clear that it still has the ambition of making unfair dismissal a day one right but that it accepts that work needs to be done to make sure that this does not deter employers from hiring and that the economic conditions need to be right. It can then ask Acas to work on guidelines for a fair way of operating probationary periods and only commit to abolishing the qualifying period altogether when there is broad consensus as to what that involves. Any future change would be made by Order and the power to reintroduce a qualifying period would be retained should it become clear that the lack of one is inhibiting growth. 

Since there would no longer be any need to spend a year working through the details of the ’initial period of employment’ the Government could also announce that the qualifying period will be reduced to 6 months in April 2026 rather than at some time in 2027 as currently planned. If they were feeling cautious, they could also phase it in with Regulations reducing the qualifying period to 12 months in the first instance. 

Taking this approach would mean that the manifesto pledge remains on the table and that tangible progress would be made towards it much more quickly than is currently envisaged by the Government’s implementation timetable. It would also be a clear win for the Government. After all they will have persuaded the Conservatives that a six month qualifying period for unfair dismissal is reasonable and will not deter employers from taking people on. Had the Bill started with a six-month qualifying period I very much doubt that they would have been prepared to accept that.  

Implementing the Employment Rights Bill is a huge task and there are a number of areas where the Government is going to struggle (I still think that the whole guaranteed hours thing is a disaster waiting to happen). Accepting – for now – a six-month qualifying period allows the Government to make a tangible improvement in workers’ rights and also provide some reassurance to the business community. I think it would be a smart move. Let’s see what happens.