A Jamie HR manager's guide

The manager's guide to the 2027 unfair dismissal changes

A practical guide for managers and small businesses on the Employment Rights Act 2025 changes to unfair dismissal: the new six-month qualifying period, exactly which dismissals the transitional rule covers, the removal of the compensation cap, what stays the same, and how to get ready before 1 January 2027.
Six months, not two years
Compensation cap removed
Ready before 2027

From 1 January 2027, unfair dismissal protection starts at six months' service, not two years.

The Employment Rights Act 2025 cuts the qualifying period for an ordinary unfair dismissal claim from two years to six months, and removes the cap on the compensatory award. This guide sets out exactly how the change works, which dismissals the transitional rule covers, what stays exactly the same, and the practical steps to take before it commences.

What's inside
The law today: two years' service3
The Employment Rights Act 2025: six months from 20274
The transitional rule: which dismissals are covered5
Compensation: the cap is being removed6
What stays exactly the same7
How this interacts with probation8
Readiness: review your probation process9
Readiness: train managers on fair process10
Readiness: audit recruitment and update your documentation11
Getting ready for 202712
How Jamie HR helps13

The law today: two years' service

Right now, most employees need two years of continuous service before they can bring an ordinary unfair dismissal claim.
  • Section 108 of the Employment Rights Act 1996 sets the current qualifying period at not less than two years' continuous employment for an ordinary unfair dismissal claim.
  • Continuous service is counted from the employee's start date to their effective date of termination.
  • Employees who fall short of two years' service currently have no right to bring an ordinary unfair dismissal claim, unless an exception applies.
  • Around 6.3 million employees, 22% of everyone aged 16 and over in employment, have been with their current employer for between six months and two years, according to government analysis published alongside the Act.
Manager tip
Check how you currently calculate continuous service, including any breaks or transfers, so you are working from the correct start date once the six-month threshold applies.

The Employment Rights Act 2025: six months from 2027

Section 25 of the Employment Rights Act 2025 cuts the qualifying period to six months, with a start date now fixed in law.
  • Section 25 of the Employment Rights Act 2025 reduces the ordinary unfair dismissal qualifying period from two years to six months.
  • The right to request written reasons for dismissal is reducing on the same timetable, from two years' service to six months'.
  • Section 25 comes fully into force on 1 January 2027, under the Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026.
  • A narrow enabling power within section 25 started earlier, on 1 July 2026; the qualifying period and compensation changes themselves take effect on 1 January 2027.
Manager tip
Diarise 1 January 2027, and check any dismissal planned around that date against the transitional rule before you act.

The transitional rule: which dismissals are covered

Whether the old or new qualifying period applies turns on one specific date: the effective date of termination, not the date notice was given.
  • The commencement regulations set the dividing line at the employee's effective date of termination, as defined in the Employment Rights Act 1996, not the date a dismissal decision is made or notice is given.
  • If the effective date of termination falls on or after 1 January 2027, the new six-month qualifying period applies, even if notice was given before that date.
  • If the effective date of termination falls before 1 January 2027, the current two-year qualifying period continues to apply to that dismissal.
  • In practice, this means employees who already have six months' service or more on 1 January 2027 gain unfair dismissal protection from that date, and other employees gain it once their own service reaches six months.
Watch out
A dismissal notice given in late 2026 that takes effect on or after 1 January 2027 is very likely to fall under the new six-month rule. Take advice before dismissing anyone approaching either threshold.

Compensation: the cap is being removed

The Act removes the existing limit on one part of unfair dismissal compensation, but not the other.
  • Section 25 also repeals section 124 of the Employment Rights Act 1996, the provision that currently caps the compensatory award.
  • The compensatory award covers an employee's actual and projected financial losses; as of 6 April 2026 it is capped at the lower of £123,543 or 52 weeks' gross pay.
  • Once the cap is removed, the compensatory award will no longer be limited to a fixed figure or a set number of weeks' pay.
  • The basic award is calculated differently and is not being removed. It remains capped at 30 weeks' pay, subject to the statutory limit on a week's pay, giving a maximum basic award of £22,530 as of 6 April 2026.
  • The Department for Business and Trade has said it will publish further guidance on the practical implications of these changes; guidance cannot change the law itself or predict how tribunals will apply the changes as case law develops.
Watch out
Removing the compensatory award cap raises the potential cost of getting a dismissal wrong, particularly for higher earners. Review your process for higher-risk dismissals ahead of January 2027.

What stays exactly the same

The change only affects ordinary unfair dismissal. Several other protections are untouched and already apply from day one.
  • Claims of discrimination under the Equality Act 2010 have no qualifying period and are unaffected by this change.
  • Automatically unfair dismissal reasons already have no qualifying period, under section 108 of the Employment Rights Act 1996.
  • These include dismissal connected to pregnancy or family leave, whistleblowing, health and safety, trade union membership or activities, and asserting a statutory right.
  • The Employment Rights Act 2025 does not change any of these day-one protections; it only shortens the qualifying period for an ordinary unfair dismissal claim.

How this interacts with probation

Probation and the unfair dismissal qualifying period are separate concepts, but the two increasingly overlap in time.
  • Probation length is set by contract, not by law, and is not linked to the statutory qualifying period.
  • About 40% of businesses already run a discretionary probation period, and most of those are six months or less, according to government analysis published alongside the Act.
  • Where a probation period runs for six months or longer, an employee may reach the new qualifying threshold before or shortly after probation ends.
  • See the Jamie HR guide to probation periods for full detail on setting objectives, running reviews and ending employment fairly during probation.
Manager tip
Review probation length against the six-month threshold specifically, rather than assuming your current length gives you the same buffer it did under the two-year rule.

Readiness: review your probation process

The readiness work for January 2027 starts with the process you already run in the first months of employment.
  • Check how long your standard probation period runs, and whether it still gives enough time to assess performance before the six-month qualifying threshold is reached.
  • Confirm probation reviews are structured and recorded at agreed points, not left to a single conversation at the end.
  • Set clear performance and conduct expectations in writing from day one, so any later decision is evidenced.
  • Build in enough time between a review and a decision to act on it, whether that is confirmation, extension or dismissal.

Readiness: train managers on fair process

Every dismissal, whatever the employee's length of service, should already follow a fair process under the ACAS Code.
  • The ACAS Code of Practice on disciplinary and grievance procedures sets the minimum standard for handling dismissal and disciplinary cases.
  • An employment tribunal takes an employer's compliance with the ACAS Code into account when a case is heard.
  • Train managers to follow a fair, documented process now, rather than waiting until January 2027 to change practice.
  • Cover the essentials in training: setting clear expectations, investigating where needed, holding a fair hearing, and offering a right of appeal.
Manager tip
Book ACAS Code training for managers well ahead of January 2027, so fair process is already standard practice once more employees are covered by unfair dismissal rights.

Readiness: audit recruitment and update your documentation

Getting ready for 2027 also means looking at decisions made earlier in the employment relationship.
  • Review recruitment and probation-setting decisions now, so hiring managers are applying consistent standards across similar roles.
  • Update written statements of employment particulars and probation letters to reflect current practice.
  • Update disciplinary, grievance and dismissal policies to reference the six-month qualifying period from 1 January 2027.
  • Make sure HR systems flag the six-month service point for every employee, not only the end of probation.

Getting ready for 2027

A summary of what changes, what does not, and what to do before 1 January 2027:
  • From 1 January 2027, the unfair dismissal qualifying period falls from two years to six months, under section 25 of the Employment Rights Act 2025.
  • Whether the new rule applies turns on the employee's effective date of termination, on or after 1 January 2027.
  • The cap on the compensatory award is being removed; the basic award remains capped.
  • Discrimination and automatically unfair dismissal reasons are unaffected and already have no qualifying period.
  • Review probation length and process, train managers on the ACAS Code now, and update documentation and HR systems ahead of the change.

How Jamie HR helps

Getting ready for 2027 comes down to knowing where every employee stands and keeping a fair, recorded process. Jamie HR keeps both in one place.
  • Service-date tracking that flags when each employee crosses the six-month qualifying mark.
  • Probation and review records held in one place, ready if a decision is ever challenged.
  • Policy library so dismissal and disciplinary processes stay consistent with the ACAS Code.
  • Written statements and letters generated and stored from day one.
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This guide is general information, accurate to the best of our knowledge as of 2026, and is not legal advice. Employment law changes and every situation is different, so for a specific case take professional HR or legal advice. Sources: ACAS, gov.uk and the Employment Rights Act 2025.