The government’s plans for unfair dismissal to become a day-one right (subject to reasonable use of probationary periods) create an uncertain time for employers, particularly those currently taking on new hires or entering into fixed term contracts. While we await detail of the government’s plans, we take a brief look at the history of the qualifying period and the transitional arrangements which have applied, the latter potentially indicative of what the arrangements will be this time around.

The right not to be unfairly dismissed has been part of established UK employment law since 1971 and is currently legislated for in the Employment Rights Act 1996. Although there are some exceptions, the right has always been subject to a qualifying period of service, i.e., that the employee must have been working for their employer for a prescribed period of time before they have unfair dismissal rights.

The length of the qualifying period has changed several times, fluctuating between six months and two years, typically increasing under Conservative leadership and reducing under Labour.

When the right not to be unfairly dismissed was first introduced in 1971, the qualifying period was two years, reducing to six months in 1974 (with a long transition period where it was a year) before increasing to one year in 1979. In 1980, the qualifying period increased to two years for employers with fewer than 21 employees (remaining at one year for other employers), only extending to all employers from 1985. The two-year qualifying period then remained fairly settled until 1999 when it was reduced to one year, before increasing again to two years in 2012.

The ups and downs of the qualifying period can be tricky to manage, particularly when a change is anticipated but the details are unclear. In particular, not knowing how the transition from one qualifying period to another will work, and which employees it will apply to. Looking back over historical changes, different approaches have been taken but the common theme from the past three changes to the qualifying period is that the transitional provisions favoured the employee.

In 1985 and 2012 when the qualifying period increased from one year to two years, the longer qualifying period only applied to anyone employed on or after the date when the change took effect. This resulted in larger employers having employees with different qualifying periods depending when they had started employment (there being no change for smaller employers who were already subject to the two-year period).  

Conversely, when there was a reduction in the qualifying period from two years to one year in 1999, the change applied to dismissals where there was an effective termination date on or after the date when the change took effect. This meant that the shorter one-year period applied to all employees from a particular date, regardless of when they started employment.

The change was not retrospective in either case. In other words, anyone who had an effective date of termination before the change took effect had to rely on the qualifying period in place at the time of the termination.

If the same approach is adopted when the qualifying period is scrapped or reduced under the new government, we can expect it will apply to all employees from the effective date, rather than only to new hires on or after the change comes into force. This will give unfair dismissal rights to thousands of employees who do not currently have the two years’ service required to be eligible.

Employers recruiting staff now will need to be mindful of this likelihood, with fixed term contracts of under two years in length potentially coming into scope of unfair dismissal law.