Six Month Unfair Dismissal Rights: the law is changing in January 2027 and you need to act NOW

I have written before about the Employment Rights Act 2025 and the significant changes this is bringing into the workplace.

There is another major change from January next year, which employers need to start to plan for right now. 

Dismissing someone within two years of their start date

As from 1^st January 2027, the qualifying period for unfair dismissal drops from two years to six months.

In practice this means that it becomes much harder for an employer to dismiss someone, even if they haven’t worked for you for very long (this is called a Short Service Dismissal).  You will need to make sure that someone is the right fit for your organisation and the role you took them on for within the first six months of their employment.

The new legislation comes into force from 1^st January, so it means that anyone who has worked for you for longer than six months cannot be dismissed unless you go through a formal process (disciplinary, capability), with proper support and time to improve.  You will have to give them a written reason for the dismissal and the correct notice period.   Whilst this is a much more fair and compassionate way of treating your employees, there is no doubt that it will cause more work for employers, along with higher costs and a much higher risk of legal claims.

Don’t  leave it until January – you need to think about this now

Whilst the change comes in January, it will be effective immediately, so anybody you have employed up to  1^st July 2026 will have completed six months of employment by the time the law is in force.  Anyone you employ between July and December 2026 will be part of the way through that six months.

You cannot carry on managing people the way you have before.  You do not have the “luxury” of deciding after someone has worked for you for ten or fifteen months that you need to dismiss them, without any proper process.

Probationary Periods have become more important

There has been a tendency with some employers to use probationary periods as an extended interview process. If the employee doesn’t fit in for some reason, or struggles with the work, then the end of the probationary period is used as an excuse to dismiss them – often without anything in writing and no process of any kind. This was “safe” because the person couldn’t claim unfair dismissal.

If you wait until the end of a probationary period of six months or more to give someone notice to terminate their employment, that will automatically extend their employment beyond the new six month period.  This will mean that they can (and probably will) claim unfair dismissal if you have not gone through a proper process.

To justify a dismissal as fair during the probationary period, employers will need to be able to show they have followed a fair process, including regular reviews with the employee about their progress and their ability to do the job.  You will be expected to have offered support, where they need to improve, and to have given them sufficient time to show an improvement. 

You will still be able to dismiss them (as with anybody else) but you will need to show it was a fair dismissal.

If you want to dismiss someone after the six month period, you will need to show that you have given them warnings that they need to improve their performance, conduct, attendance (or other area where they are failing) and that you have kept accurate records of where they have not reached the required standards, what you have done to support them, and any warnings they have been given.

What action do you need to take?

• Review your policies.  They may have been written with a “safe” two years in mind. Handling grievances, misconduct sickness absence, other statutory leave may all need to be reviewed to ensure you offer the right support, give reviews and warnings and that the process is fair.  
• Review your onboarding and induction processes and documentation.  Probationary periods have suddenly become a lot more critical and you will need to keep records of reviews and any warnings.
• Train your managers in supporting people through probationary periods and beyond.
• Tighten up your recruitment processes and strategy.  You need to make sure you are employing the right people – you haven’t got two years to “see if it works out”.
• Check on documentation and whether/how it needs to be retained.
• Think about your dismissal processes and what lead-in time you will need to dismiss someone.  Notice periods are critical as you cannot leave it until the week before the six month period runs out – someone’s notice period may take them over the six month period and so into the territory of being able to claim unfair dismissal.
• If  you are not sure where to start, get some professional HR support.

The cost of getting it wrong is going up, as well

A final thing for employers to note is that the cap for compensation for unfair dismissal is going to be removed under the Employment Rights Act as well – also from 1^st January 2027.  This means that tribunals will be able to award full financial losses and employers could be required to make considerable payments where they are shown to have unfairly dismissed an employee.

Senior employees, in higher paid sectors (technology, financial services, for example), where reward packages can be complex, are likely to be able to  claim large awards.  This could seriously affect the profitability of smaller employers, in particular.

If you need some help with updating your documentation, reviewing your processes and preparing for these changes, please contact us at Heartfelt HR.