Unfair dismissal changes 2027: The six-month qualifying period explained

One of the most significant changes introduced by the Employment Rights Act 2025 is the reduction of the qualifying period for unfair dismissal protection, bringing forward the point at which employees gain these rights and increasing risk for employers.

Employment law

Published: 23 April 2026•8 minutes read

From 1st January 2027, employees will be entitled to bring an unfair dismissal claim after just six months of continuous service - down from the current two-year threshold. For HR professionals and business owners, this is an important development to plan for now rather than later. Although the change takes effect at the start of 2027, it will apply to existing employees, meaning workforce planning, performance management, and documentation practices will need to adapt well in advance.

Summary

From 1 January 2027, the qualifying period for unfair dismissal protection reduces from two years to six months.
The change is retrospective - any employee with at least six months' service by 31 December 2026 gains protection automatically on 1 January 2027.
Employers can no longer rely on the two-year buffer when managing performance, conduct, or cultural fit in the early stages of employment.
A fair reason and fair procedure will be required for any dismissal once an employee hits the six-month mark.
Compensatory awards for unfair dismissal will be uncapped.
Probationary periods and statutory unfair dismissal rights are legally separate - extending a probationary period does not delay an employee's rights.
Employers may wish to adopt a short probationary period with structured check-ins throughout, and a formal review before the probationary period ends.
HR policies, contracts, and offer letters that reference the two-year threshold must be updated before 31 December 2026.
Line managers need targeted training on the new timelines and fair performance management practices.
Organisations that invest in clear expectations, regular feedback, and consistent documentation from day one will be best placed to manage risk under the new rules.

The current position

Under the existing rules, employees must complete two years' continuous service before they can bring a standard unfair dismissal claim. This two-year threshold remains in force until 31 December 2026.

When does the new unfair dismissal rule come into force?

On 1 January 2027, the qualifying period for ordinary unfair dismissal protection reduces from two years to six months. This means employees will be entitled to the full protections of unfair dismissal law - including the right to a fair reason for dismissal and a fair procedure - much earlier in their employment.

Who gains unfair dismissal rights on 1 January 2027?

The change will apply retrospectively to existing employees. This means that any employee who has already accumulated at least six months’ service by 31 December 2026 will gain unfair dismissal rights automatically on 1 January 2027, without needing to reach the two-year threshold.

The practical impact is wider than many employers may initially assume.

An employee hired on 1 July 2026 will have exactly six months' service by 31 December 2026 and will qualify on 1 January 2027.
An employee hired on 1 October 2026 will reach six months' service on 1 April 2027 and will qualify from that date.
An employee hired on 1 March 2025 will have over 22 months' service by 1 January 2027 - well beyond the new threshold - and will qualify immediately.
An employee hired on 1 March 2026 will have ten months' service by 31 December 2026 and will qualify on 1 January 2027.

In short: any employee that started employment before 1st July 2026 will have at least six months' service by the 31st December 2026 and will automatically qualify for unfair dismissal protection on 1st January 2027.

Quick reference: When do employees qualify?

Start date	Service by 31 Dec 2026	Gains rights
1 July 2026	6 months	1 January 2027
1 March 2026	10 months	1 January 2027
1 March 2025	22 months	1 January 2027
1 October 2026	3 months	1 April 2027

What the new rules mean in practice

The changes place a greater premium on good people management from day one of employment. The current two-year qualifying period effectively meant that dismissal decisions in the first two years carried lower legal risk. That buffer will soon be significantly reduced.

HR teams and line managers will need to ensure that robust and documented processes are in place before the rule changes take effect. Here are some key actions to consider before the end of 2026.

Audit your current workforce. Identify employees who will cross the six-month threshold before or on 1 January 2027. This will help you plan any ongoing performance conversations with appropriate care and documentation.
Review and update your probationary period framework. With unfair dismissal rights arising at six months, probationary reviews and documentation take on added significance. Ensure that performance concerns are identified, communicated, and recorded within the probationary period.
Update HR policies and employment contracts. Any documents that reference the two-year qualifying period - including offer letters, handbooks, and contracts - will need to be revised. This should be completed before 31 December 2026.
Brief your line managers. Many managers are unaware of the current two-year rule, let alone the incoming change. Targeted training on the new timelines and on fair performance management practices is essential.

Do the new unfair dismissal qualifying rules apply to employees in their probationary period

A question many employers will face is what happens when an employee is still in their probationary period when the January 2027 rules take effect. The answer is that probationary periods and statutory unfair dismissal rights are legally separate - one does not govern the other. There is no legal requirement to put in place probationary periods, these are useful for employers but not essential.

From 1 January 2027, an employee will gain unfair dismissal protection at six months’ continuous service regardless of whether they are still within their probationary period. If an employer's standard probationary period runs for 12 months, for example, an employee will have full statutory protection six months before their probationary period ends. Extending a probationary period does not delay the accrual of these rights; the statutory position will always overrule contractual probationary periods.

If dismissal is being considered during the probationary period and the employee has accrued more than six months’ qualifying service from 1 January 2027, employers should seek legal advice before proceeding. They should also ensure that a documented record of discussions and formal meetings is maintained, as this will be essential in defending any subsequent unfair dismissal claim.

Removal of the cap on compensatory awards

The compensatory award for ordinary unfair dismissal will become uncapped from 1 January 2027, removing the current limit of either 52 weeks' gross pay or the statutory maximum - whichever is lower. This is one of the most significant commercial changes for employers, substantially increasing potential financial exposure and likely driving up settlement values and tribunal litigation.

Final thoughts

The reduction in the qualifying period is part of a broader programme of employment law reform under the Employment Rights Act 2025. The stated aim is to provide workers with greater security and protection from the early stages of employment, but for employers it represents a fundamental shift in how employment risk is managed.

In practical terms, the change brings forward the point at which dismissal decisions become legally scrutinised. What was previously a relatively low-risk period for addressing performance or capability will now require a more structured, evidence-based approach within the first six months of employment. The margin for informal decision-making is significantly reduced.

Employers should therefore view this not simply as a legal update, but as an operational one. Organisations that rely on informal probationary periods, delayed feedback, or lightly documented decision-making will be more exposed under the new regime. Conversely, businesses that implement clear expectations during onboarding, regular performance discussions, and consistent documentation from day one will be better positioned to manage risk and achieve fair dismissal outcomes.

Although January 2027 may seem distant, the retrospective nature of the change means its impact will be felt immediately. Employers who wait until late 2026 to prepare may find themselves managing a workforce where a significant proportion of employees have already acquired protection.

The most effective response is early preparation. Reviewing probationary frameworks, upskilling managers, and embedding consistent performance management practices now will ensure that, when the new rules take effect, they do so within a system that is already aligned to the higher standard expected.