The Employment Rights Act 2025 has introduced a whole new host of changes to employment law, and those changes are continuing to be slowly implemented. One important change is that on 1 January 2027, the qualifying period for protection against ordinary unfair dismissal will reduce from two years to six months. This means that employees will only need six months’ service to raise an action for unfair dismissal, rather than two years. Cases where there is currently no qualifying period, such as automatically unfair dismissals, will be unaffected.
What unfair dismissal cases does this apply to?
The reduction to the qualifying period will apply to all cases of unfair dismissal where the effective date of termination falls on or after the 1 January 2027. In practice, this means that someone employed on 1 July 2026 will be able to raise a claim of unfair dismissal if they were dismissed on or after 1 January 2027.
Other changes to unfair dismissal
The time limit to bring most employment claims will increase from three to six months from 1 October 2026 (except from breach of contract claims in Scotland, which will increase on 9 November 2026). This means that employees will have twice as long to raise a claim against their employer. It is unclear whether this will apply retrospectively and we await the government’s update on this.
The cap on compensation for ordinary unfair dismissal claims is set to be removed in January 2027. The current cap on compensation for ordinary unfair dismissal claims is the lower of either £123,543 or 52 weeks’ gross pay. Once the cap is removed, employers could face significantly greater financial exposure in unfair dismissal claims, bringing them closer into line with discrimination claims where compensation is already uncapped.
What does this mean?
Understandably, we will likely see an increase in unfair dismissal claims given that a further 6.3 million employees will be protected through the reduction in the qualifying people. The UK government believes that this will result in an additional 9,000 Acas claims.
However, the UK government hopes that by reducing the qualifying period for unfair dismissal, it will remove the need for employees to bring more discrimination or whistleblowing claims (which do not require a qualifying period of service). These types of claims are more complex and therefore take up more tribunal time, so the anticipation is that a reduction to discrimination or whistleblowing cases will alleviate some of the strain on the current employment tribunals service, which is struggling under the amount of complex claims it has to handle.
Whether an increase to unfair dismissal claims will lead to a decrease to discrimination and whistleblowing cases is yet to be seen – only time will tell and we are sceptical that will be a consequence particularly with the increased use of AI by employees or former employees pursuing claim, resulting in every type of potential claims being included, even if they are largely unfounded. It may be the case that employees will continue to raise both types of claims, leading to more complex claims.
Impact on probation periods
One thing that employers should be mindful of when the new qualifying period is implemented is how this will interact with probation periods.
For example, if an employee has a six month probationary period and at the end of the six months the employer decides that the employee has not met the necessary requirements to stay on, that employee will already have met the qualifying period to make an unfair dismissal claim. In this scenario, this makes any dismissal a risk for a potential employment claim.
Therefore, employers should consider reviewing their probation periods policy and look at potentially reducing probation to under six months, even though this does mean less time for employers to deem whether an individual is a suitable candidate. Managers should be trained in how to carry out end of probation processes in light of these changes and keep good records in order to minimise risk. They will need to actively apply their mind to the employee’s suitability for the role well in advance of the end of the probationary period.
As always, it is important that employers are proactive in getting ahead of the new changes, by seeking legal advice early on as to how their business may be impacted and reviewing their policies and procedures to ensure that they are up to date.
Earlier intervention in performance management and disciplinary issues
The changes also highlight the importance of intervening at an early stage if there performance or conduct issues arise, including both informal intervention and formal processes. It is also important to ensure these are properly documented.
