Unfair dismissal
The unfair dismissal landscape is set to radically change through the combination of a much shorter qualifying period and uncapped compensation.
The qualifying period for ordinary unfair dismissal claims will reduce from two years to six months. Employees who have completed six months' continuous service by 1 January 2027 will immediately acquire unfair dismissal protection, while those with less than six months' service will gain protection once they reach that threshold.
The new six-month qualifying period does not affect claims for automatically unfair dismissal, such as dismissals on trade union grounds, for pregnancy-related reasons, or other claims that already attract day-one protection.
The Act also removes the power to alter the qualifying period through secondary legislation. The six-month qualifying period is now prescribed in primary legislation, making it more difficult for future governments to change.
In practice, employees will gain protection against unfair dismissal much earlier in their employment, reducing the period during which an employer can dismiss without demonstrating a fair reason and following a fair procedure. Employers are likely to reduce probation periods to below six months as a consequence.
The existing cap on compensation, currently the lower of 52 weeks' gross pay or £123,543, will be abolished. Tribunals will instead be able to award compensation reflecting proven financial losses flowing from the dismissal, subject to the usual legal principles of causation, mitigation and remoteness.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
Visit our main Employment Rights Act Hub for further information.