Upcoming Unfair Dismissal Changes: What Employers Need to Know Now
The Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026 (SI 2026/559) have been made, bringing into force sections of the ERA 2025 dealing with unfair dismissal changes on 1 January 2027.
Major changes to the law on unfair dismissal are on the way, and employers should start preparing now. From 1 January 2027, employees will gain protection much earlier in their employment and, in some cases, compensation exposure could increase significantly. For businesses, this is the right time to review contracts, policies, probation processes and dismissal procedures.
What is changing?
- The qualifying period for most ordinary unfair dismissal claims will reduce from two years to six months.
- The statutory cap on compensatory awards for unfair dismissal will be removed.
- The right to request written reasons for dismissal will also arise earlier.
- These reforms are expected to increase risk for employers who rely on informal processes during the early months of employment.
When do the changes take effect?
The key unfair dismissal reforms are due to take effect on 1 January 2027. Importantly, they will apply based on the employee’s effective date of termination. That means businesses should not assume current rules will continue to protect decisions made close to the changeover date. Employers should plan ahead well before the end of 2026.
Why this matters for employers
These changes mean that fair process, proper documentation and timely performance management will matter much earlier in the employment relationship. Employers should be reviewing probation periods, manager training, dismissal procedures and internal policies now to reduce the risk of claims later.
Our employment law team advises businesses on managing workplace risk, updating contracts and policies, and handling dismissals fairly and effectively. If you would like advice on how these upcoming reforms could affect your organisation, we are here to help.
Need support preparing for the 2027 changes? Please get in touch with our employment law team for practical, tailored advice.
Managing Partner / Solicitor
Jennifer Carpenter became Managing Partner of the firm in January 2014. She was appointed as a Partner in January 2005, having qualified as a solicitor in 2000 after completing her training with the firm. She specialises in Employment, property dispute litigation and contentious probate. She has extensive experience of undertaking advocacy in the Magistrates Court, County Court and Employment Tribunals. Jennifer is also our Compliance Officer for Finance and Administration (COFA) and our Data Protection Officer.
