Major change to unfair dismissal reform: six-month qualifying period confirmed

The Government has made a major change to one of its headline proposals in the Employment Rights Bill (ERB): the plan to make unfair dismissal a day-one right. Following significant opposition in Parliament, the Government will instead reduce the qualifying period for unfair dismissal from two years to six months.

This compromise is intended to break the current parliamentary deadlock and allow the ERB to pass without undue delay. While the change creates more of a balance between employee security and employer flexibility, it will still represent a substantial shift for employers, requiring considerable adjustments to the way new hires are managed. 

What has been announced?

Here are the key details in the Government's announcement:

• Employees will gain unfair dismissal protection from six months' service (down from the existing two years).
• Existing day one protection against discrimination and automatically unfair dismissal will remain unchanged.
• Any future variations to the unfair dismissal qualifying period will now require primary legislation. This will involve greater parliamentary scrutiny, making changes less likely.
• The Government has signalled an intention to lift the unfair dismissal compensation cap (currently the lower of 12 months' gross salary or £118,223). This is a surprise addition, not previously featured in the ERB. It is not yet clear if this means a removal of the cap entirely or an increase to one or both of the elements. Current speculation suggests the 52-week limit will be removed and the financial cap retained, potentially benefiting lower earners, but that is yet to be confirmed.
• The Government has committed to a full, fair and transparent consultation to shape the detail of these reforms.
• This change has come about following extensive discussions between the Government and trade unions and business groups, with agreement being reached that the ERB can now progress.

For a full discussion of the revised reforms on unfair dismissal and practical steps employers can take to prepare, see our updated blog here.

What happens next?

This decision is intended to create a “workable package” that allows the ERB to progress through Parliament without further delay.

Before Royal Assent can be granted, the ERB needs to return to both the House of Commons (scheduled for 8 December 2025) and the House of Lords. It will be tight to achieve this before Christmas, but the Government has reiterated its commitment to deliver implementation in line with its original timetable. The first reforms – day-one rights to sick pay and paternity leave and the launch of the Fair Work Agency – are still set to come into force in April 2026.

Why this matters for employers

The move to a six-month qualifying period for unfair dismissal protection is significant and, compared to day one protection, will offer employers more flexibility to assess new hires and address early performance concerns. 

Nevertheless, a reduced qualifying period will still have a substantial impact on existing management practices. Employers will need to become proactive in assessing performance and making employment decisions in the reduced period before unfair dismissal protection takes effect. This will require adjustments to recruitment, onboarding, and probation and dismissal procedures. For practical steps employers can take now to prepare, see our updated blog above.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, November 2025