As of 1 January 2027, employees will be able to claim unfair dismissal if by then they have completed six months of employment. Currently they need two years’ employment to qualify.
This means that any employee in post on or after 1 July 2026 will be able to claim unfair dismissal just six months later. For example, an employee taken on in April 2026 will qualify for full unfair dismissal rights in January 2027.
Firms will need to move quickly to assess new employees and, where necessary, dismiss well before the end of six months into their employment. There will be a renewed emphasis on contractual probationary periods.
Who will be able to make a claim for unfair dismissal?
From 1 January 2027, all employees who have been dismissed and who have been continuously employed for six months or more can make a claim for mainstream or ‘ordinary’ unfair dismissal. It remains the case that there is no qualifying period necessary to bring most claims for automatically unfair dismissal (such as a claim for a whistleblowing-related dismissal).
Less widely known is that the deadline for commencing employment tribunal claims is set to double from three months to six months. It is not yet clear when this change will come in but it won’t be before this October. This will make it easier for employees to pursue claims and will involve a longer period of legal exposure for employers.
How much compensation will an employee be entitled to claim?
The compensation cap will also be removed so that, as of 1 January 2027, employers could face an unlimited claim. This replaces the current cap of 52 weeks’ gross pay or the statutory maximum cap of £123,543, whichever was the lower.
Future claims will be based on the actual financial loss suffered by the employee as a result of the unfair dismissal, meaning that more highly paid employees will be able to bring claims that reflect their actual losses. One consequence might be that we start to see fewer of the claims that currently don’t require a qualifying period and were not capped, like whistleblowing or discrimination.
How should employers prepare for the changes?
Hiring suitable staff is difficult and often involves taking a chance on a candidate that may not pay off.
To address this, it is already common to have a probation period of three or six months to allow an employer to evaluate a new hire. These key legal changes will mean that firms must now be much more diligent in managing probationary periods if they want to avoid serious problems. Firms will have to actively monitor and assess new recruits so that unsuitable employees are identified and dismissed well before the end of the six-month period. Key decisions on confirming staff in their post should not be left to the last minute.
Standard employment contracts, handbooks, and policies should be updated where appropriate to reflect this.
The hiring process in general will need to be more rigorous, as there will be a serious risk of being left with unsuitable employees merely six months into their employment. And managers should be trained to recognise and identify problems quickly and to ensure that good records are kept.
How 3CS can help
Our expert employment solicitors can support your business in preparing for the reduced qualifying period for unfair dismissal claims by reviewing and updating employment contracts, policies, and procedures. Practical guidance can also be provided to managers and HR teams to ensure probationary periods and performance management processes are robust and fit for purpose, and to minimise the risk of unfair dismissal claims.
For advice or guidance in respect of the new rules, please get in touch.
