As Labour’s flagship Employment Rights Bill nears the end of its “ping-pong” stage in Parliament, private landlords need to look closely at the fine print. While you may view yourself primarily as a property owner, if you employ anyone to help run your business—such as a property manager, a regular cleaner, or a maintenance person—this bill changes your legal risk profile significantly.

1. The “Day One” vs. Six-Month Rule

Originally, Labour promised “day one” rights against unfair dismissal. Following pressure from business groups, they have compromised on a six-month “probationary” period.

• The Impact: Currently, employees generally need two years of service before they can claim unfair dismissal. Under the new rules, that protection drops to just six months. Landlords will have a much shorter window to assess if a new hire is right for the role before the risk of a tribunal claim kicks in.

2. The “Sneaky” Scrapping of the Payout Cap

Perhaps the most alarming update for small employers is a last-minute amendment regarding Employment Tribunal awards.

• The Current Limit: Usually, compensatory awards for unfair dismissal are capped at roughly £118,000 or one year’s salary (whichever is lower).

• The Change: The Government is seeking to scrap this cap. This means that a “standard” unfair dismissal claim could theoretically result in an unlimited payout, similar to how discrimination or whistleblowing claims are handled now.

3. A “Level Playing Field” for Risk

As the article notes, payouts for discrimination are already uncapped and can be massive. For example, in 2024:

• The average award for sex discrimination was over £53,000.

• The highest award for disability discrimination reached nearly £1 million.

By removing the cap on all unfair dismissals, the Bill removes the “safety net” for employers. For a private landlord with one or two employees, a single lost tribunal case without a cap could be financially ruinous.

What should landlords do now?

If you employ staff directly:

• Review your contracts: Ensure you have clear probationary periods and performance review processes in place.

• Document everything: Because the window for “unfair dismissal” claims is shrinking from two years to six months, you must be much more diligent about documenting performance issues from the very beginning.

• Check your insurance: Ensure your Public Liability or Business Insurance includes robust Employer’s Liability and legal expenses cover for tribunals.

Key Statistics for Your Reference: