During the 2024 general election campaign, reforming workers’ rights was a key element of Labour’s policy platform. Sir Keir Starmer’s party proposed making the right not to be unfairly dismissed a ‘day one’ right.

Labour has pledged to make changes to workers’ rights within the first 100 days of government. We await confirmation of how unfair dismissal law will change. The devil will be in the detail. If the requirement to have two years continuous employment in order to attain have unfair dismissal protection is scrapped, logically a bigger portion of the workforce will have protection.

Speaking to The Times’ Entrepreneurs column, Employment partners Joseph Lappin and Charlie Thompson gave their sense of how employers might react to unfair dismissal law reform.

Joseph Lappin says…

If unfair dismissal protection becomes a day one right, and employers will always need to complete a ‘fair’ process before dismissing fairly, there will inevitably be an increase in the number of confidential settlements reached between employers and employees. Reaching an early settlement with a disgruntled employee is often a sensible alternative to starting and concluding a termination process and facing the risk of litigation if it doesn’t go to plan.

There is also an upside for employees in ‘doing a deal’. Banking a severance payment is often more appealing than spending months fighting it out in the Tribunal. Not all disputes settle. If the number of employees with unfair dismissal protection increases we can expect to see more claims being pursued in the tribunal – but they won’t double overnight.

Charlie Thompson says…

The level of anxiety on Labour’s workers’ rights reforms is misplaced. At the moment, you can get fired for no reason and without any process during the first two years of employment. Clearly the new government will look to give employees more protection from unfair dismissal, but I really doubt they will expect employers to follow a forensic, time-consuming and arduous process to dismiss in cases where a new joiner is seriously incompetent or is caught with their hand in the till.

Under the current rules, because employees do not have day one protection from unfair dismissal, they sometimes rely on other “day one” rights, like protection from discrimination. So at the moment an employee may be more likely to argue that their dismissal is discriminatory. And discrimination claims are much more difficult to resolve than straightforward unfair dismissals. So if the government increases unfair dismissal protection, we might actually see a reduction in discrimination complaints.

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