From 1 January 2027 employers will face one of the most significant changes to unfair dismissal law in decades. Under the Employment Rights Act 2025 the qualifying period for bringing an ordinary unfair dismissal claim will reduce from two years’ continuous service to just six months. At the same time, the statutory cap on compensation for ordinary unfair dismissal claims will be abolished. These reforms will significantly alter the legal landscape for employers. With the new regime fast approaching, employers should begin reviewing their recruitment, probationary, and performance management processes to ensure they are prepared.
Under the current law, most employees must complete two years’ continuous service before they are entitled to bring an ordinary unfair dismissal claim in an Employment Tribunal. This has afforded employers greater flexibility when managing employees during the early stages of employment, provided that any dismissal is not discriminatory or automatically unfair.
From 1 January 2027 the qualifying period will reduce to six months’ continuous service.
Importantly, the changes will apply retrospectively. Employees who hold six months’ continuous service on 1 January 2027 will benefit from the new qualifying period. This means that any employees recruited from 1 July 2026 onwards will have the requisite qualifying service when the change comes in. As a result, many employees will acquire unfair dismissal protection...
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