The government is set to pledge enhanced protections against unfair dismissal will be implemented starting in 2027, following a revision of initial proposals last week.
Labour ministers have agreed to a six-month qualifying period for unfair dismissal claims, a shift from the original plan for day-one access, in response to concerns raised by business groups.
This revised timeframe remains shorter than the existing two-year qualifying period.
While the business department did not initially specify an implementation date for the amended six-month qualification, the government is now expected to commit to a January 1, 2027 commencement when the relevant legislation returns to the House of Commons on Monday.
Such assurances, while not legally binding, are considered politically significant by parliamentarians.
The move, first reported by The Guardian, comes after discussions between ministers and Angela Rayner, former deputy PM, and Justin Madders, ex-employment minister, both key figures in the original proposals.
Following these talks, Rayner agreed to withdraw a planned amendment that would have set the start date for 2026.
Rayner expressed apparent support for the government’s decision on social media, stating that a January 2027 start date would extend protection to those hired after July 2026, representing “real change for workers.”
Currently, employees with two years of continuous service are entitled to additional legal protections against “ordinary” unfair dismissal.
Employers must demonstrate a fair reason for dismissal, such as conduct or capability, and prove they acted reasonably and followed due process.
Until recently, Labour planned to eliminate this qualifying period entirely during 2027, replacing it with a new, likely nine-month, legal probation period to safeguard businesses.
However, following discussions with unions and business groups, the qualifying period will now be set at six months, and the legal probation period has been abandoned.
The policy shift has been largely welcomed by business groups, who argued the original proposals would deter hiring.
Conversely, it has been criticized by some Labour MPs on the left and by the Unite union, a significant donor to the party.
The government still plans to introduce new day-one rights to sick pay and paternity leave beginning in April 2026.
In a separate development, the government is expected to remove the current caps on compensation for financial loss in ordinary unfair dismissal cases.
Currently, successful claimants are limited to either their annual salary or £118,223, whichever is lower.
The government intends to amend its employment rights bill to eliminate both these caps as the bill progresses through its final stages in Parliament.
This change would align the process more closely with “automatic” unfair dismissal cases—such as those involving discrimination or whistleblowing—where financial loss awards are not capped.
The removal of these caps was not included in the original version of the bill presented last October or in Labour’s general election manifesto.
However, ministers committed to the change following recent talks aimed at finding common ground between unions and industry groups.
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Dozens of the party’s backbenchers are said to have abstained, amid concerns from rural MPs at the move.
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