Employment & Pensions Blog: Unfair Dismissal Rights under the New Labour Government

With a new Labour Government we are expecting to see significant changes made to the employment law landscape within the first 100 days of them taking office. This is as promised in their Manifesto and in New Deal for Working People (New Deal). 

One of the most significant proposed change is Labour’s commitment to make protection for unfair dismissal a day 1 right. 

Given the significant impact this change will have on employers, and employees, we have explored this in more detail below. 

Unfair Dismissal: The Current Law and the Proposed Reform 

Currently, in order to pursue a claim for unfair dismissal, employees must have 2 years’ continuous employment at the point of their dismissal. Whilst the qualifying period required in order to pursue such a claim has changed over the years (from 1 to 2 years), Labour would be the first Government to remove the qualifying period all together. 

Labour’s justification for removing the qualifying period is that it will prevent employees with less than 2 years’ service from being dismissed without reason. Further, Labour believes that making this a day 1 right will also help drive up standards in the workplace and encourage people to move jobs, leading to increased salaries and productivity. Whether this will be the case remains to be seen. 

Whilst the New Deal emphasises that this new protection will not prevent employers from dismissing for capability, conduct, redundancy or within probationary periods with “fair and transparent rules and processes”, it fails to provide much detail on how this will operate in practice. For example, whether this day 1 right will apply to new employment with effect from a specified date only, or whether it will be backdated. Whilst it states that employers will be able to operate probationary periods with “fair and transparent rules and processes”, it fails to cover what those will look like, and whether if dismissed during such periods, employees will be prevented from pursuing claims for unfair dismissal, or whether they will be subject to more relaxed rules and processes during probation. 

Labour have promised to conduct a full and comprehensive consultation on the implementation of the New Deal. This should hopefully answer all of these questions and provide clarity on how it will operate in practice. 

Impact on Employers and Employment Tribunals

It is anticipated that making unfair dismissal a day 1 right will result in employers facing an increase in unfair dismissal claims against them. In turn, this will mean an increase in costs being incurred in defending such claims. 

Once Labour confirms when/how this protection will be introduced, employers are advised to: 

• Review and adapt their existing disciplinary, capability, redundancy policies and procedures to ensure compliance and fair processes; 
• Introduce or adapt their probationary policies to ensure compliance with any new rules; 
• Be more vigilant in their recruitment processes to ensure that they hire the best person for the role and that those appointed have the requisite skill and experience needed. This will necessitate a detailed review and strengthening of their recruitment policies and procedures.

If, as anticipated, this change does bring a surge in legal claims being brought (including spurious claims), this will inevitably place even more strain on an already backed up and under resourced Tribunal system. We have not seen any commitments from Labour to tackle the current delays faced in Employment Tribunals, or any intention to increase resources available to them to address these problems. The Ministry of Justice has already consulted on whether fees should be reintroduced to the Employment Tribunal (consultation closed on 25 March 2024). However, this was a consultation carried out under a Sunak Conservative Government and is not in keeping with the principles of Labour's New Deal. It therefore feels as if this would be an unlikely step for the Government to take.  

Comment 

Remember that until legislation is changed employers can proceed to dismiss an employee who has less than 2 years services without risk of a claim of unfair dismissal being brought. However, the change to legislation is imminent. Therefore, for any employers conducting internal processes currently involving employees who have less than 2 years service where dismissal is a possibility, those employers may want to speed up or circumvent that process.

Labour have proposed a multitude of other employment law changes, such as abolishing zero-hour contracts and further trade union rights. For further information on those changes, please see our recent article ‘All Change? Labour’s New Deal for Working People, the clock is already ticking’. 

If you require any further assistance or support, please contact a member of the Employment Team.