The Employment Rights Act 2025 is bringing significant changes to unfair dismissal protection, with important implications for employers across the UK.
From 1 January 2027, the statutory qualifying period for ordinary unfair dismissal protection will reduce from two years to six months. This means employees will gain the right to bring an ordinary unfair dismissal claim much earlier in their employment than under the current rules.
For employers, this is not a change to leave until late 2026. The practical impact is already approaching, particularly for employees who have recently joined the business or who will be recruited in the coming months.
Why 1 July 2026 Is an Important Date
Although the change comes into force on 1 January 2027, it will apply to employees who already have six months’ continuous service by that date.
This means that anyone hired on or before 1 July 2026 will have reached their six-month milestone by the time the new law takes effect. As a result, they will gain ordinary unfair dismissal protection immediately from 1 January 2027, provided they remain employed and meet the relevant eligibility requirements.
In practice, employers will no longer be able to rely on the existing two-year qualifying period when managing performance, conduct, probationary reviews or early-stage exits. Decisions that may previously have carried lower unfair dismissal risk will need to be approached with greater care.
What Is Changing?
At present, most employees need two years’ continuous service before they can bring an ordinary unfair dismissal claim. From 1 January 2027, that period will reduce to six months.
This means employers will need to be able to show a fair reason for dismissal and follow a fair process much earlier in the employment relationship. This is likely to have a particular impact on:
- probationary period management;
- recruitment and onboarding processes;
- performance concerns in the first year of employment;
- conduct issues involving new starters;
- fixed-term and short-service employees;
- settlement discussions and exit strategy;
- manager training and HR procedures.
Employers should also be aware that the Employment Rights Act 2025 includes wider changes to unfair dismissal remedies, including the removal of the cap on compensatory awards for successful unfair dismissal claims. This could increase financial exposure where dismissals are not managed properly.
For a fuller overview of the wider reforms, read our article: Employment Rights Act 2025: What Employers Need to Know.
Steps Employers Should Take Now
Employers should review their current approach to hiring, probation and early-stage performance management. Practical steps may include:
- Audit Recent and Upcoming Hires
Employers should identify employees who will have six months’ service by 1 January 2027. This will include anyone hired on or before 1 July 2026, as well as longer-serving employees who are currently below the two-year qualifying period.
- Review Probationary Periods
Businesses may wish to consider whether their probationary periods remain appropriate, whether review points should be brought forward, and whether managers have clear guidance on how to handle concerns before the six-month point.
- Strengthen Onboarding and Early Performance Management
The first few months of employment will become even more important. Employers should make sure new starters receive clear objectives, appropriate training, regular feedback and early intervention where performance or conduct concerns arise.
Where concerns are identified, these should be documented and addressed in a structured way rather than left until the end of probation.
- Train Managers on the New Risk Profile
Line managers are often the first to identify performance, conduct or suitability concerns. They should understand that the period for assessing new employees is shortening significantly and that informal or delayed management can create risk.
Training managers on fair process, record keeping, probation reviews and when to involve HR will be essential.
- Update Contracts, Policies and Procedures
Employment contracts, probation clauses, disciplinary procedures, capability policies and template letters may all need to be reviewed in light of the reduced qualifying period.
Employers should ensure their documents are consistent, practical and aligned with the new legal framework.
- Take Advice Before Dismissal Decisions
Where an employee is approaching or has passed six months’ service, employers should take particular care before making dismissal decisions. A fair reason and a fair process will be increasingly important, even at an earlier stage in the employment relationship.
Seeking advice early can help reduce the risk of tribunal claims and ensure the employer’s position is properly protected.
How DTM Legal Can Help
DTM Legal’s Employment Law team supports employers with the full range of workplace issues, including unfair dismissal, performance management, disciplinary processes, probationary reviews, contract updates, policy drafting and strategic HR advice.
We can help businesses prepare for the Employment Rights Act 2025 by reviewing current documentation, advising on risk areas, training managers and supporting employers with practical steps.
For advice on preparing your business for the new unfair dismissal rules, please speak with the DTM Legal Employment Law team or email employment@dtmlegal.com.
This article is for general information only and does not constitute legal advice.