One of the most important changes to employment law in years is about to happen.
As of 1 January 2027, the qualifying period for mainstream unfair dismissal will reduce from two years to only six months of continuous service. By ‘mainstream’ unfair dismissal, we mean dismissal that is not for an automatically unfair reason, like whistleblowing, for which there is no qualifying period.
Until 2027, the qualifying period for mainstream unfair dismissal remains two years. Between now and the end of this year, for staff that have less than two years’ service taking prompt action now can prevent an unwanted employee from bringing an unfair dismissal action.
Dismissal once employment reaches the qualifying threshold
Once an employee has the necessary minimum service time, it will be necessary to follow a fair dismissal process, which should be compliant with the Acas Code of Practice on Disciplinary and Grievance Procedures. A dismissal must also be substantially fair in all the circumstances of the case.
Remember, making a tribunal claim costs the employee nothing. There are no fees to pay and this can provide an incentive for individuals to bring a speculative claim with the cynical aim of securing an advantageous settlement from you.
But these considerations do not apply if the dismissal is before the qualifying threshold is reached.
Assessing staff
So, with only a few months left until the changes, now is the time to evaluate employees who stand to gain protection from the extended law and empower them to pressure your firm into making an unjustified settlement.
Most contracts have a built-in probationary period, often the first three months of employment, during which there may be some form of structured assessment of performance and a shorter notice period can be given, often of one week.
The shrinking window of opportunity to dismiss before 2027 without risking an unfair dismissal claim means that firms should pay proper attention to probationary periods.
It’s all about timing
Reviews need to start early enough to avoid running over the looming deadline.
Once any employees are identified for exit, it is then crucial to look at the notice period for termination under their contracts and also see whether you are able under their contracts to make a payment in lieu of notice – unless the dismissal is for a reason that does not require notice at all, such as gross misconduct.
The exact termination date is often critical. In the timescales we are now considering, if the date falls on 1 January or later and the employee has at least six months’ service, they will qualify for mainstream unfair dismissal rights.
It is also very important to note that, if an employee is not given at least their statutory minimum period of notice, this is added on to their qualifying service so that they may then qualify to bring a claim.
So, for example, if your firm started employing someone on 29 June 2026 and dismissed them on 30 December without notice, a week is automatically added by law so that their date of termination for unfair dismissal qualifying purposes would be 6 January – and they would be able to make a mainstream unfair dismissal claim.
Expensive mistake
Being stuck with unwanted staff next year could prove to be very expensive.
In addition to the reduction in the length of the qualifying period, the compensation cap will also be removed, meaning employees will be able to claim an unlimited sum in lost earnings (and not limited to a year’s pay or the statutory cap, which is currently £123,543).
How 3CS can help
Our employment solicitors can provide expert advice and guidance in dealing with employment issues, to include assistance with navigating the dismissal process.
For advice or guidance in respect of the new rules, please get in touch.
