Unfair dismissal rights

From 1 January 2027, the qualifying periods will change for protection against ‘ordinary’ unfair dismissal, employees’ right to request written reasons for dismissal and protection against unfair dismissal on grounds of spent convictions. The existing cap on the maximum compensatory award that a tribunal can award in unfair dismissal cases will also be removed from 1 January 2027.

Key changes

From 1 January 2027:

The qualifying period for protection against ‘ordinary’ unfair dismissal will be reduced from two years to six months.
The qualifying period for employees’ right to request written reasons for dismissal will be reduced from two years to six months.
The qualifying period for protection against unfair dismissal for reason of spent convictions will be removed.
The current cap on compensatory awards for unfair dismissal will be removed.

The Employment Rights Act 2025 does not change the current existing day one protections against discrimination and automatically unfair grounds for dismissal.

There will be no change to the basis on which compensatory awards are calculated by the employment tribunal. Claims will continue to be calculated on the basis of actual and projected losses evidenced by the claimant when determining awards. In practice, the vast majority of awards for unfair dismissal are well below the current monetary cap.

The non-renewal of a fixed-term contract on expiry counts as a dismissal for unfair dismissal purposes, and this will remain unchanged by the Employment Rights Act 2025.

For employees with at least six months qualifying service, an employer will need to ensure that the non-renewal of their fixed-term contract on expiry constitutes a fair dismissal.

Actions to take:

For dismissals with an effective date of termination before 1 January 2027, the current two year qualifying period for unfair dismissal protections will still be in force.

In preparation for these changes to unfair dismissal your organisation may want to seek independent advice when considering updating your employment policies.

In particular, if you use a contractual probation period consider how it will operate with a 6 month qualifying period in force.

Territorial extent

The changes to unfair dismissal apply across England, Scotland and Wales. They do not apply in Northern Ireland, where legislation related to unfair dismissal is devolved.