Preparing your business for upcoming changes to the law on unfair dismissal

This is a guest blog by REC business partner, JMW Solicitors LLP

The normal qualifying period for unfair dismissal claims will reduce to six months from 1 January 2027, which is a significant change relevant to you and your clients. 

The Employment Rights Act 2025 (the “ERA”) has already made key reforms to employment law and other changes are expected.  This article outlines a number of important points to help ensure that you are prepared for certain changes and can show your clients that you are in the know to support them too. 

What is the current position?

Currently, employees are required to have a minimum of two years’ service with their employer before they qualify to bring claims for ‘ordinary’ unfair dismissal. 

Where an employee is successful in bringing an ordinary unfair dismissal claim against their employer, the compensatory award that can be made by an Employment Tribunal is currently capped as either £123,543 or 52 weeks’ gross pay (whichever is lower in the particular case).

What are the unfair dismissal changes?

The ERA will soon reduce the qualifying period for protection against unfair dismissal from two years to six months. It is intended that employees who have six months’ service or more as of 1 January 2027 will automatically be protected from unfair dismissal, whilst others will obtain the protection once they have reached the six-month period.

The existing cap on compensatory awards for unfair dismissal claims will also be removed from 1 January 2027. Whilst this is unlikely to have a significant impact in most cases, it will likely place employers at risk of increased financial exposure in cases involving highly paid employees or those who have experienced long-term loss of employment.

How is this likely to impact you and what steps can you take now?

Employers often adopt probationary periods of three to six months in order to assess suitability, with the option to extend. Under the new changes, employers will have significantly less time to manage matters before the new qualifying period is met. 

In light of this, there are a number of steps that you can take now to prepare.  You may also wish to discuss upcoming changes with your clients if appropriate (who may well be considering their own procedures).  This includes:

Revisiting recruitment and probationary practices to ensure that they are fit for purpose and considering the duration used;

Ensuring that probationary periods are effectively managed moving forwards (i.e. regular monitoring, setting clear expectations and taking appropriate action where conduct or capability issues may arise);

Reviewing contracts of employment and disciplinary and dismissal policies and processes to ensure that they are legally compliant; and

Providing adequate training to managers on the changes and managing your processes. 

If you are considering these steps and making changes, then JMW Solicitors can help (details below).

Need some help?

If you require any legal support with the matters outlined in this article and/or reviewing business practices, please contact us on Emma.James@jmw.co.uk and Lydia.lambert@jmw.co.uk