Unfair Dismissal and the continuing of continuity: The Employment Rights Act 2025 and Section 108 of the Employment Rights Act 1996 – by James Hand

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1. Introduction

August 2026 sees the 30^th anniversary of the Employment Rights Act 1996 coming into force. In the words of the Lord Chancellor at the time, it (with the linked Industrial Tribunals Act 1996) restated ‘most of the employment legislation which remained unconsolidated after the Trade Union and Labour Relations (Consolidation) Act 1992’ (HL Deb Vol 568, col 468 (16 January 1996)), including the legislation which, inter alia, provided protection from unfair dismissal (the Employment Protection (Consolidation) Act 1978). When the Employment Rights Act 1996 was passed it had 245 sections and, with its schedules, ran to some 176 pages. It has been much amended since then and now has some 435 sections covering over 450 pages (including references to the amending legislation), with, for example, 56 sections covering zero hours and similar contracts and tips inserted between sections 27 and 28 by a combination of the Small Business, Enterprise and Employment Act 2015, the Employment Rights Act 2025 and the Employment (Allocation of Tips) Act 2023. 

Indeed, the Employment Rights Act 2025 has brought about many changes to the 1996 Act and, as originally proposed, was heralded in a post on this blog as ‘may be the most ambitious set of reforms since 1971’ (Bogg and Ford). The Industrial Law Journal has this summer published six pieces to date (online first and open access), ahead of publishing a special issue, looking at the Act and its contribution to economic growth (McGaughey); the opportunities missed regarding unfair dismissal (Collins); the fire and rehire provisions (Bogg and Green); the zero hour provisions (Adams); the amendments regarding workplace harassment (Sedacca); and its approach to collective rights (Dukes). The passage of the Employment Rights Bill was by no means smooth and among the compromises was the continuation of section 108, the current provision which lays down the requirement (and exceptions to it) that in order for employees to be eligible to claim for unfair dismissal they must have been continuously employed for a set period. 

2. Section 108 of the Employment Rights Act 1996 – continuing continuity: planned repeal and change of plan

The original plan, under the June 2024 document Labour’s Plan To Make Work Pay: Delivering A New Deal for Working People, was to increase job mobility by introducing ‘genuine two-sided flexibility that works both ways – giving workers the security to change jobs’ by providing ‘basic individual rights from day one for all workers, ending the current arbitrary system that leaves workers waiting up to two years to access basic rights of protection against unfair dismissal, parental leave and sick pay’ balanced by ‘ensuring employers can operate probationary periods to assess new hires’ (p.6).  The original version of the Employment Rights Bill 2025 therefore proposed repealing section 108 of the Employment Rights Act 1996, which laid down the qualifying period of employment for unfair dismissal (and the exceptions to it), through clause 30 and Schedule 2, para 10, and introducing complex provisions concerning the probationary period. 

Following opposition from business groups and within the House of Lords to a number of aspects of the Bill, discussions with business representatives and trade unions, and with the government keen to progress the bill, a compromise was reached whereby ‘day one’ rights would still be introduced for sick pay and paternity leave but general protection for unfair dismissal would have the qualifying period reduced to six months rather than take effect on the first day (see Collins for details of the parliamentary ping-pong (pp.7-11 of the Advance Article)). This obviated the need for the probationary provisions (and with them the insertion of a section perhaps aptly numbered 98ZZA which provided some guidance on its operation but left much to regulations as to how the standard reasonableness test for unfair dismissal in section 98(4) would be amended for dismissals within the probationary period). As the government asserted when announcing the compromise, it was intended to benefit ‘millions of working people who […] gain new rights and offer business and employers much needed clarity’ (Hansard HCWS1115). The Bill as enacted, therefore, did not see the repeal of section 108 but, rather, brought up the number of amendments to it to over 30 since 1996.

3. Section 108 of the Employment Rights Act 1996 – a much-amended provision and its precursors

There are some sections of an Act which are inherently prone to amendment. For example, in the Employment Rights Act 1996, section 227 details the maximum amount of a week’s pay used in the calculation of some types of compensation, awards and payments under the Act. This amount changes each year via the Employment Rights (Increase of Limits) Orders (such as the 2026 Order linked here) and so together with other changes one may expect the number of amended versions of the provision to be high – and indeed there have been 33 versions of the section to date.  That the provision which stipulates the length of continuous employment (and exceptions to that requirement) will see the 30^th amendment soon come into force is perhaps more surprising but reflects the increasing exceptions to the requirement to have a minimum period of continuous employment as well as, to a lesser extent, the continued see-sawing history of the required length.

a. The qualifying period

The history of the period of qualifying employment predates the consolidating Employment Rights Act 1996.  When the Act was passed, section 108(1) held that Section 94 (the right not to be unfairly dismissed) ‘does not apply to the dismissal of an employee unless he has been continuously employed for a period of not less than two years ending with the effective date of termination’; with subsection (2) reducing the period to one month if it was due to certain medical grounds (relating to actions pursuant to legislation regarding lead, ionising radiation and the control of substances hazardous to health) and subsection (3) disapplying the period altogether for specified grounds.  Before this the period had vacillated from the two years, or as phrased then, 104 weeks, as specified by section 28 of the Industrial Relations Act 1971 (the right not to be unfairly dismissed being introduced by section 22 of that Act), down to 26 weeks by Paragraph 10 of Schedule 1 to the Trade Union and Labour Relations Act 1974. However, for the six months following commencement of the schedule it was set as a transitional period of 52 weeks and then went back up to 52 weeks when the Employment Protection (Consolidation) Act 1978 was amended by The Unfair Dismissal (Variation of Qualifying Period) Order 1979.  It subsequently went back up to two years for employees of small businesses in 1980 (through section 8(1) of the Employment Act 1980 inserting a special provision (section 64A(1)) into the 1978 Act) and then generally for all newly employed workers in 1985 (via The Unfair Dismissal (Variation of Qualifying Period) Order 1985). After a period of stability, during which the 1996 Act was passed, the New Labour government saw the period reduced to one year again by the Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualification Period) Order 1999. Via a 2012 order of the same name, as part of the coalition government’s attempt to help businesses, the period reverted to 2 years. However, only ten percent of the amendments to section 108 of the 1996 Act relate to the qualifying period. The vast bulk of the changes relate to the exceptions to that requirement. 

b. The exceptions

As mentioned, when the 1996 Act was passed, section 108(3) specified a small number of grounds where the requirement for continuous employment was disapplied. When the right was introduced back in 1971, the continuous employment requirement was disapplied if the reason for the dismissal was that the employee had exercised, or had indicated an intention to exercise, the rights of workers in respect of trade union membership and activities provided for in the Act (section 29 and s.5 of the Act). The 1978 consolidation Act originally disapplied the requirement where it was shown ‘that the reason [or, if more than one, the principal reason] for the dismissal was an inadmissible reason (s.64(3))’ but ‘inadmissible reason’ was initially defined as relating to trade union membership or activities (s.58(5)). 

Changes in 1992 and 1993 saw the removal of the trade union exception but the introduction of three other exceptions: dismissal due to health and safety, dismissal due to pregnancy and childbirth and dismissal due to assertion of a statutory right, and further to those, dismissal of employee representatives was added in 1995 (s.64(4)).  The 1996 Act then added to these with protection for shop workers and betting workers who refuse Sunday work and of trustees of occupational pension schemes (and originally split maternity across a number of provisions). The exceptions then proliferated. In the first 20 years of the Act, there were only five years when section 108 was not amended through the insertion of a new exception (or in some cases a repeal). 

The late 1990s saw the inclusion of working time, the national minimum wage, protected disclosures, and tax credits added to the list (and the repeal of some separate maternity related provisions following the introduction of an expanded package of maternity and parental leave rights). The early 2000s saw the addition of protection for part-time workers, fixed-term employees, and work related to European Works Council (or the information and consultation procedure in a Community-scale undertaking or Community-scale group of undertakings). Protection for those involved with union recognition and for those denied the right to be accompanied was also introduced but this was done outside of section 108 itself (but by reference to it, effectively an implied amendment or, in the terminology used on legislation.gov.uk ‘modifications etc. (not altering text)’). The mid and late 2000s saw more European-derived additions regarding membership of consultative/negotiating bodies and the provision of information/consultation, as well as for pension representatives and aspects related to age discrimination (failure to notify retirement or consider request not to be retired).

2010-2012 added protection for the new rights regarding study and training and the use of blacklists, omitted the retirement exception (following the repeal of the underlying normal retirement age provisions) and the addition of protection for agency workers and for pension enrolment.  Political opinions or affiliation and of membership of a reserve military force were excepted from the requirement in 2013 and 2014, as was refusal to accept an offer by the employer for the employee to become an employee shareholder, with 2016 adding protection for shopworkers who refused to work additional hours on Sundays. Following that, there was then only one more change to section 108 until 2026 (the repeal of one of the European consultative protections (regarding cross-border mergers) in post-Brexit 2020) although there were further exceptions applied through cross-reference rather than modification (regarding zero hour workers in 2016 and 2022).

4. Continuity of Employment and Automatically Unfair Dismissal

The vast majority of these exceptions to the requirement for qualifying employment were introduced alongside provisions rendering dismissal (or selection for redundancy) for such reasons automatically unfair, rather than requiring consideration of reasonableness under standard unfair dismissal. Thus, under the Industrial Relations Act 1971, dismissal for trade union reasons did not need the continuous employment requirement and was automatically unfair.  However, this parallel approach was not always the case and under the originally enacted version of the Employment Protection (Consolidation) Act 1978, pregnancy-related reasons were included as automatically unfair (s. 60) but were not excluded from the continuous employment requirement until 1993 (whereas amendments to the Act saw health and safety, breach of a specified statutory right and employee representatives join both lists at the same time).  Similarly, the short-lived statutory disciplinary and dismissal procedures (2004-2009) were automatically unfair under section 98A of the Employment Rights Act 1996 but employees needed to clock up the then two years continuous employment to be eligible to claim. Conversely, the exceptions to the continuous employment requirement for dismissals where the reason (or principal reason) is or relates to political opinions or affiliation (introduced in 2013) or membership of a reserve military force (introduced in 2014) are not automatically unfair reasons but are subject to the test of reasonability.

In the case of the former, following an adverse ECHR case (Redfearn v the United Kingdom [2012] ECHR 1878), the government opted to tweak unfair dismissal to provide potential protection for people dismissed for reasons relating to political affiliation rather than amend the Equality Act 2010 (which may have led to wider justification for direct discrimination). In the case of reserve military service, while dismissal for a reason connected with it is not automatically unfair, if the termination of employment relates to potential call-up for whole-time service, then the employer would be criminally liable under the Reserve Forces (Safeguard of Employment) Act 1985 and may have to pay a fine (up to level 3 on the standard scale) and up to 5 weeks’ pay as compensation.  While section 104 does provide that assertion of a statutory right is an automatically unfair ground (and s.108(3)(g) provides the exception to the continuous employment requirement), it applies only to relevant statutory rights (which are defined as any right conferred by the Employment Rights Act 1996 for which the remedy for its infringement is by way of a complaint or reference to an employment tribunal, the right to minimum notice, specified union related rights under the Trade Union and Labour Relations (Consolidation) Act 1992 working time rights conferred by specified legislation and the rights conferred by the Transfer of Undertakings (Protection of Employment) Regulations 2006. Furthermore, the assertion would have to be of an underlying right and not the right not to be dismissed as otherwise it would totally circumvent the continuous employment requirement (Spaceman v ISS Mediclean Limited T/A ISS Facility Service Healthcare [2019] IRLR 512, [12], [17], [32]).

Changes brought about by the Employment Rights Act 2025, to take effect from 2027 under the 2026 commencement order, continue this predominantly-but-not-parallel approach. A new paragraph (ha) is introduced to section 108(3) bringing dismissals in relation to spent convictions and their disclosure into the list where protection is from day one.  The Government opted not to make it expressly an automatic unfair dismissal ground despite lobbying to do so from Unlock, the rehabilitation charity, as per their submission on the bill. While the Rehabilitation of Offenders Act 1974 has no explicit enforcement provisions for the rights it grants, there is some case authority (see e.g. Hand (2015) 210-211) which indicates that if a dismissal is related to a spent conviction and the Act holds that a spent conviction is not a ‘proper ground’ for dismissal then such dismissals would necessarily (if not automatically) be unfair. New automatically unfair grounds are, however, introduced for variations of contract so as to combat fire and rehire practices (e.g. section 104I), but these are to date not accompanied by a continuous employment exception. While the 2025 Act does contain provision for this in section 28(5), and so paragraphs (go) and (gp) may be inserted into section 108, unlike the rehabilitation of offenders provision (SI 2026/559) and the automatic unfair provision (ACAS), it is not clear when that may take force and may be subject to further consultation. Similarly, the new provisions on guaranteed hours for employees and agency workers (which would see section 104BA and section 104BB inserted as automatically unfair grounds and paragraphs (gha) and (ghb) inserted into section 108(3)) have not as yet been given a commencement date.

5. Conclusion

The requirement for continuous employment, which had been part of unfair dismissal for 55 years, since its inception, and which was set for repeal, is therefore set to continue. Indeed, it is now in a stronger position as the government have, as part of the deal to get the bill through and as stated in a parliamentary written statement, ‘committed to ensure that the unfair dismissal qualifying period can only be varied by primary legislation’ (though how that will be ensured is open to question). While the first exception to it also dates back that far, the family of exceptions has grown considerably, most particularly since the advent, 30 years ago, of the current Act. These exceptions would have remained in any case, in a different form, even if the general continuity requirement had been dispensed with; the proposed section 108A would have relisted the exceptions, in a slightly more coherent form, so that people covered by those reasons who were currently protected before day one (from the date of appointment) would not lose that protection. The much-amended section 108, which now contains around five times as many exceptions than when originally passed, may be showing its age with the mass of insertions but it now looks set to grow further in the coming months and years.

(Suggested citation: J Hand, ‘Unfair Dismissal and the continuing of continuity: The Employment Rights Act 2025 and Section 108 of the Employment Rights Act 1996’, UK Labour Law Blog, 25 August 2026, available at https://uklabourlawblog.com/)