If you’ve recently started a new job, or are thinking about changing roles, you may have heard that the rules around unfair dismissal are due to change. The government has published an update under the Employment Rights Act, and the changes are significant for employees.
In short, from 1 January 2027, employees will gain unfair dismissal protection much earlier than before, and the current cap on compensation will be removed. Understandably, this has raised questions and some uncertainty.
These changes form part of the wider Employment Rights Act, which is intended to strengthen employee protections while maintaining balance in the workplace.
Below, we explain what’s changing, when it will apply, and what it may mean for you, so you can understand how the new rules may affect your situation.
What is unfair dismissal?
Unfair dismissal is a legal claim that an employee can bring if they are dismissed without a fair reason or without a fair process being followed.
At the moment, most employees can only bring a claim for “ordinary” unfair dismissal once they have two years’ continuous service. Until that point, employers generally have more freedom to end employment, provided the reason is not discriminatory or automatically unfair.
There are already important exceptions to this rule, for example, dismissals connected to discrimination, whistleblowing, pregnancy, or health and safety concerns can be challenged from day one. Those protections are not changing.
What is changing is the length of service needed to bring an ordinary unfair dismissal claim.
The qualifying period is reducing to six months
From 1 January 2027, the qualifying period for ordinary unfair dismissal claims will reduce from two years to six months’ service.
This means that if you have worked for your employer for at least six months, you will be able to challenge a dismissal if you believe it was unfair.
If you already have six months’ service by that date, the protection will apply immediately. If you start work later, you will gain protection once you reach the six-month mark.
For many employees, this is a meaningful shift. A large number of people currently fall into the gap between six months and two years’ service, where protections are limited. The change is intended to provide earlier job security, without removing employers’ ability to assess new hires during an initial period.
What does this mean in practice?
Having unfair dismissal protection does not mean an employer can never dismiss you after six months. It means they must be able to show:
- A potentially fair reason for dismissal, such as conduct, capability, redundancy, or another substantial reason, and
- That they followed a fair and reasonable process before reaching their decision.
In practice, this usually involves giving you an opportunity to understand concerns, respond to them, and improve where appropriate.
If a dismissal takes place without that fairness, you may be entitled to bring a claim, and that leads to the second major change.
The compensation cap is being removed
At present, compensation for unfair dismissal is capped. The maximum award is the lower of one year’s gross pay or a statutory limit, currently £118,223.
From January 2027, that cap will be removed entirely.
This does not mean that every successful claim will result in a large payout. Employment tribunals assess compensation based on actual financial loss, such as lost earnings while you look for new work.
In reality, many awards are far below the current cap. However, removing the limit means compensation can better reflect genuine losses in cases where dismissal has had a serious financial impact.
The aim is to ensure fairness, rather than encouraging inflated claims.
Does this change day-one rights?
No. It’s important to be clear about this.
Protections that already apply from day one, such as protection against discrimination, whistleblowing dismissals, or dismissals connected to pregnancy or maternity, remain exactly the same.
The change relates only to ordinary unfair dismissal, which previously required two years’ service.
If you are unsure which category your situation falls into, it’s often helpful to talk it through before making assumptions.
Can you still be dismissed during probation?
Yes. Many employers operate probationary periods of around six months, and these are likely to remain.
While the law is shifting in favour of earlier protection, employers can still lawfully dismiss during or after probation if they follow a fair process and have a genuine reason.
If you are approaching or have recently passed six months’ service, it can be reassuring to know that additional protections may apply, but it’s still sensible to understand your position before taking any action.
What should employees do now?
For most people, nothing needs to change immediately. The new rules do not come into force until January 2027, and they are not retrospective beyond the six-month threshold.
However, it can be helpful to be aware of the direction of travel. If you are dismissed close to that time, or are currently navigating a difficult workplace situation, understanding your rights can help you feel more in control.
You do not have to assume the worst or rush into confrontation. In many cases, people simply seek advice to understand whether what they are experiencing is normal, fair, or something they should question.
Support and clarity when work feels uncertain
Facing uncertainty at work can feel unsettling, particularly if it comes unexpectedly. Changes to employment law are intended to offer reassurance and balance, not to create conflict.
If you are unsure how these upcoming changes may affect you, or if you’re dealing with a dismissal or potential dismissal now, taking advice early can help you understand your options and decide what to do next, with confidence and clarity. Contact our Employment Team for a no-obligation chat.
