The stalemate over the Employment Rights Bill continues as the House of Commons refused to agree to the key amendments requested by the House of Lords. Among the sticking points is the crucial issue around unfair dismissal rights; the Lords want a six-month qualifying period while the government insists this should be a day one right. And with this having been a key pledge in Labour’s election manifesto, it’s clear that they are not wanting to back down.
So, what happens next?
For now, the Bill goes back to the House of Lords, with no immediate resolution in sight.
Kate Palmer, Chief Operations Officer at Peninsula, says “The reforms to unfair dismissal rights, in whichever form they finally take, represent one of the most significant changes to employment law in decades. And whilst it’s positive to see them being debated seriously, employers need clarity. And they need it sooner, rather than later.
“Like any change to employee rights, employers will need to adapt and alter their policies and processes to comply with the new law. Even though the changes aren’t due to come in until 2027, which may seem a way off, in an already challenging market for businesses, especially when it comes to recruitment and new hires, preparing for the impact of these changes won’t happen overnight.
“An overwhelming majority of the businesses we represent have told us that the unfair dismissal changes are their biggest concern out of all the proposed changes to the law under the Employment Rights Bill. 39%, in fact, believe that having a day one right to claim unfair dismissal poses a major / critical risk to their business.
“Unfair dismissal claims make up 22% of the total Employment Tribunal caseload, statistically the most common claim brought to tribunal. Currently, employees need to have at least two years’ service in order to claim ordinary unfair dismissal, so we can expect this figure to soar once the Bill becomes law.
“It’s clear that the Government intends to push this through as a day one right, regardless of warnings from businesses, employment lawyers and various industry bodies. This would potentially mean that an extra 9 million people would have the right to claim unfair dismissal. The fact that the early conciliation period has been extended from 6 to 12 weeks, effective 1 December, is an indicator that the Government knows just how overloaded the tribunal system is.
“In some regions, tribunal claims are currently being listed for 2028 – delaying justice and adding significant stress, anxiety and cost for all parties. Extending the conciliation period, while an attempt to resolve disputes early to prevent them from being pursued as claims to employment tribunal, will only serve to delay closure, exposing businesses to the possibility of claims for longer.
“That’s why we’re speaking out on behalf of our thousands of SME clients, urging both Houses to come to an agreement as soon as possible.”
Charlie O’Brien, Head of People at Breathe HR, commented:
“Any hopes that the Employment Rights Bill might soon receive Royal Assent were dashed last week, after the Commons voted to reject a number of key amendments tabled by the House of Lords.
“The Lords’ proposed changes to the Bill, which included rejecting the government’s commitment to day-one unfair dismissal protection and altering how guaranteed hours are offered to zero-hours contract workers, were important points of debate. They were also among the proposals dismissed last night in the Commons.
“The Bill will now enter another round of parliamentary ping pong – leaving employers who are anxious for clarity waiting.
“While the Bill has the potential to strengthen workplace protections, this ongoing limbo creates real challenges for small businesses and HR teams already grappling with myriad pressures. We need a definitive understanding of the key statutory requirements the Bill will bring about. But until the political wrangling ends and the final shape of the law is confirmed, employers and HRs are left in the dark – unable to plan, invest, or prepare with confidence.”