You might have today (2 July 2026) marked in your diary. It is the last day on which a new employee can start work and still have enough service to bring an unfair dismissal claim (with uncapped compensation) on 1 January 2027.
And you probably already know why: by virtue of the Employment Rights Act 2025, two key reforms to the law on unfair dismissal take effect on 1 January 2027. First, the qualifying period will reduce from two years to six months and, second, the compensatory award cap (currently the lower of 123,543 or one year's pay) will be removed entirely.
But what might be less immediately obvious is the specific impact these reforms will have on the exit of your most senior and highly paid executives, or how you might reduce your exposure to potentially uncapped compensation.
This briefing looks at these points and sets out what you should be thinking about now.
Senior executive exits are rarely straightforward. Most happen because the business has decided the individual is no longer the right person to take things forward, which is a question of fit or direction rather than a clear performance failure. That makes it difficult to show a "fair" reason for dismissal, even where "some other substantial reason" is relied on.
Even where performance is the issue, a “fair” process is rarely followed. Capability dismissals require you to give the individual time to improve, with targets, support and training in place....
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