Performance management is the main priority for HR and business leaders for the coming year according to the Freeths Employment Survey 2026.

With the rules around unfair dismissal introduced in the Employment Rights Act coming into force in January 2027, employers are right to focus on getting performance management right.

Our Employment law experts Fergus Currie, Matt McBride and Melanie Stancliffe outline what the changes mean for managing performance.

Expect more tribunals seeking more money

From 1 January 2027, protection from unfair dismissal will become a right after six months of being in a job, and the limit on compensation for unfair dismissal of 123,543 will be removed. Government calculations suggest that the reforms will result in a 6% increase in the number of claims, but these numbers may be on the low side. The cap on compensation being removed will have a very significant impact: claims are less likely to settle because of increased expectations of compensation; very high earners may now be motivated to make claims; losses for employees who benefit from final salary or defined benefit pension schemes may well go beyond the current cap, as could compensation for career-long loss.

Think 25 weeks

The Employment Rights Act 1996 says that an employee is entitled to add their statutory minimum one week's notice period to their dismissal date if they haven't received notice. Instead of six months, think 25 weeks and adjust your probationary periods accordingly.

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