A key amendment to the Employment Rights Bill means the ‘day one’ ruling will be replaced with a new six-month threshold.

The current qualifying period to claim unfair dismissal is two years.

Six business groups and trade unions including the British Chambers of Commerce were involved in discussions around the amendment.

In a joint statement, they said: “Businesses will be relieved that the Government has agreed to a key amendment to the Employment Rights Bill which can pave the way to its initial acceptance.  

“We welcomed this chance to hold meaningful dialogue and believe the constructive nature of our discussions can be a template to resolve outstanding issues.  

“Businesses have always been clear that making the Employment Rights Bill work would take business, trade unions and government working together to find a landing zone for these major policy changes.  

“This agreement keeps a qualifying period that is simple, meaningful, and understood within existing legislation. It is crucial for businesses confidence to hire and to support employment, at the same time as protecting workers. 

“This change addresses the key problem that must be sorted in primary legislation. It shows that dialogue works and is a model for how to consider the important questions that need answering in regulations before new rules come into force.  

 “Businesses will still have concerns about many of the powers contained in this Bill. This includes guaranteed hours contracts, seasonal and temporary workers and thresholds for industrial action.  

“We remain committed to working with government and unions to dealing with this in the necessary secondary legislation to implement the Bill. We must ensure that it supports opportunity for workers while avoiding damage to economic growth.  

 “That also means agreeing guidance and support for businesses to understand and effectively implement the many changes, alongside sufficient resources for the Fair Work Agency and tribunal system.” 

Jog Hundle, employment partner law firm Mills & Reeve, a patron of Greater Birmingham Chambers of Commerce, said: “Businesses have been concerned about the real-world implications that all workers would have the right to claim unfair dismissal from day one of employment. 

“Employment Tribunals are already struggling with the weight of tribunal litigation, and day one unfair dismissal rights would have increased their workload at a time when the system is already hamstrung by delays.

“The qualifying period for unfair dismissal is currently 24 months, so six months is still a major change. However, six months ties in with the probationary review period adopted by many employers, so that is a positive.

“Employers will need to ensure that they don't fall into the trap of extending probationary periods and should have probationary review policies in place for consistent and fair practices.

 “Given the wider pressures in the jobs market, the hope will be that this move encourages more businesses to continue to hire. Day one rights to sick pay and paternity leave will still proceed as planned, coming into effect in April 2026.”