Government Scales Back Unfair Dismissal Plans in Employment Rights Compromise

The government has dropped controversial plans to introduce immediate unfair dismissal protection for workers, instead opting for a six-month qualifying period in revised Employment Rights Bill proposals.

The move represents a significant retreat from Labour’s original manifesto commitment and follows intensive negotiations between business groups and trade unions over measures that had stalled the legislation’s parliamentary progress.

Under the amended proposals announced by the Department for Business and Trade on Thursday, employees will need to complete half a year of service before gaining unfair dismissal rights—down from the current two-year threshold but falling short of the day-one protection initially promised.

The revision comes after the bill became gridlocked between the Commons and Lords, with particular contention surrounding both the unfair dismissal provisions and proposed restrictions on zero-hours contracts.

Government officials assisted discussions between employer representatives and union leaders to break the deadlock, with the DBT stating the revised approach emerged from these “constructive conversations.”

Officials defended the compromise as “a workable package” that would maintain existing first-day protections against discrimination and automatically unfair dismissal grounds whilst introducing the six-month threshold for standard unfair dismissal claims.

The changes hold particular significance for the hospitality and licensed trade, where workforce flexibility and probationary periods are standard practice. The sector had expressed concerns about the operational implications of immediate unfair dismissal protection.

The revised six-month period may offer greater certainty for hospitality employers managing seasonal recruitment and high staff turnover, though it still reduces the current 24-month window significantly.

Kate Nicholls, Chair of UKHospitality, said:
“This is a pragmatic change that addresses one of hospitality businesses key concerns.

“We made clear representations to the Government that a six-month qualifying period would be much more practical for businesses and maintain job opportunities for young people, and I’m glad they have acted on those concerns.

“The Employment Rights Bill will still bring substantial changes and extra cost to hospitality businesses. In light of the increases to wages, business rates and other costs coming in April, it would be sensible for the Government to delay the introduction of statutory sick pay from day one by six months.

“This would give businesses much-needed breathing room and avoid further damage to employment opportunities.”

The DBT emphasised the amended legislation would still “benefit millions of working people who will gain new rights” whilst providing “much-needed clarity” for businesses.

In a concession to labour advocates, ministers committed that the six-month qualifying period could only be changed through primary legislation, preventing future adjustments through secondary regulation. The government also pledged to remove the compensation cap for successful unfair dismissal claims.

The revisions aim to secure the bill’s passage to royal assent according to the government’s delivery schedule.