Day 1 Rights to Unfair Dismissal: Preparing Employers for the Employment Rights Bill

The change appears quite onerous for employers and is one of the points that the House of Lords has objected to which has led to the delay in the Bill being implemented. It is a significant change that will necessitate HR teams looking at how they onboard and recruit staff.

It is important to note that the implementation roadmap has this as a 2027 change and so there is plenty of time to adjust to this and to get involved in the consultations and developments that follow.

The Bill contemplates a statutory “initial period of employment” during which a more “light-touch” dismissal regime could apply. The Government seems to favour a nine-month maximum for this probation-style period. During this period, procedural expectations may be lower, but “fairness” will still be required, and employers will need a clear, fair reason for dismissals.

The concept of the “light touch” dismissal regime during probationary periods will shape the overall impact assessment here but some of the obvious issues for employers from this change are as follows:

Increased Legal Risk and Tribunal Exposure

The Government’s own impact assessment suggests a rise in tribunal claims and associated costs. The employment tribunal service is already creaking under the weight of the existing backlog of claims so this is not welcomed.

There is an interesting remedy point that arises if a “short service” employee raises an unfair dismissal claim close to their Day 1 start date. An employer may legitimately argue that the individual had no reasonable expectation of long service and that the forward-looking tribunal compensation award should be minimised.

The practical reality may be that employers will presumably be helped by “short service” employees mitigating their loss and finding new employment after only recently securing employment. Contrast that with a person who has worked in the same business for 20 years who might more reasonably explain the difficulties in career transitioning as opposed to a short server who has recently been job hunting.

The point here is that these short service claims may not be high value but of course they can still be cumbersome for employers to deal with.

Higher Compliance and Administrative Costs

Employers will need to tighten up dismissal procedures, even during probation, to ensure they are “fair” from day one. That will involve more robust documentation of performance, conduct, warnings, reviews, and investigations so there is an audit trail.

As line managers will be critical to handling probationary issues fairly, more training and oversight will likely be needed together with revising HR policies: existing probation, dismissal, and performance-management frameworks may need to be overhauled.

Stronger Need for Probation / “Initial Period”

Obviously, Day 1 rights create an obligation on the employer to better manage staff issues as they develop and immediately upon work commencing.

Financial Costs

According to HR professionals, this reform could impose a substantial financial burden: the Government’s own business-impact assessment estimates up to £5 billion a year in costs across companies. These costs largely come from increased administration, more litigation risk, and more rigorous HR processes.

Mitigation Strategies Employers Can Use

Remembering this is a proposed 2027 change then the main action employers should take now is to monitor the consultation timeline and be prepared to adjust internal policies and strategy in a timely manner.

Given the risks, employers will likely need to take a number of proactive steps:

• Revise HR Policies & Contracts: Update employment contracts, probation clauses, and dismissal policies to reflect the new legal reality.
• Implement Structured Probation: Use formal milestones (e.g., 1 month, 3 months, 6 months) with documented performance reviews.
• Train Managers: Equip managers with skills to handle performance/conduct issues fairly and document appropriately.
• Improve Record-Keeping: Keep thorough records of all performance discussions, warnings, investigations, and outcomes.

Conclusion

The move to day-one unfair dismissal rights is a major shift: it fundamentally changes the risk calculus for employers around hiring and dismissals.

While the Bill allows for a statutory “light-touch” probationary period, the exact mechanics of that remain to be seen and will be subject to consultation.