Introduction
From 1 January 2027, the unfair dismissal qualifying period in the UK will reduce from two years to six months under the Employment Rights Act 2025. This is one of the most significant recent UK employment law changes affecting unfair dismissal rights.
This change will affect every employer, including SMEs. The first six months of employment will carry far more legal weight than before, and many existing employees will gain protection much sooner than under the current two-year rule. If you manage people, it makes sense to prepare now rather than wait.
Quick Summary of the 2027 Unfair Dismissal Changes
- The qualifying period reduces from two years to six months.
- Employees with six months’ service when the law takes effect will gain protection immediately.
- The cap on unfair dismissal compensation will be removed.
- SMEs should review probation and dismissal processes now.
What Is Changing to the Unfair Dismissal Qualifying Period?
At present, most employees must complete two years’ continuous service before they can bring a claim for ordinary unfair dismissal, but under the new legislation only six months’ service will be required.
In addition:
- The cap on unfair dismissal compensation will be removed.
- The qualifying period for requesting written reasons for dismissal will also reduce to six months.
Discrimination and automatically unfair dismissal claims remain day one rights.
What Is Ordinary Unfair Dismissal?
Ordinary unfair dismissal arises where an employer dismisses an employee without:
- A fair reason, or
- A fair process.
Fair reasons generally include conduct, capability, redundancy, statutory restriction, or some other substantial reason. Employers are expected to follow a reasonable procedure, in line with the Acas Code of Practice.
Reducing the qualifying period means these standards apply much earlier in employment.
How the 2027 Changes Affect Existing and New Employees
When the new rules come into force, any employee with six months’ continuous service or more will fall within unfair dismissal protection.
This means:
- Current employees who have already passed the six-month mark at that point will be covered.
- They will not need to complete two years’ service.
- Employees who joined during 2026 will move onto the six-month qualifying framework once it applies.
Anyone employed now, or joining before 1 July 2026, is very likely to have at least six months’ service when the new regime begins.
Those starting later in 2026 will qualify once they reach six months’ continuous service.
In practical terms, the two-year window is shrinking for a significant proportion of your workforce.
Why the Six-Month Unfair Dismissal Qualifying Period Matters for SME Employers
Many SMEs have relied on the two-year qualifying period as a lower-risk phase.
Under the six-month rule:
- Early dismissals carry greater legal exposure.
- Six-month probation periods effectively align with the qualifying threshold.
- Informal approaches become harder to defend.
- Financial risk increases due to removal of the compensation cap.
This does not require complex systems, but it does require a consistent and documented approach.
Probation Periods and the Six-Month Threshold
Six-month probation periods are common, but under the new framework that period becomes far more sensitive from a legal perspective.
To reduce risk:
- Set clear expectations from day one.
- Use measurable performance standards.
- Hold structured review meetings.
- Raise concerns early.
- Record support and feedback provided.
A dismissal at the end of probation without evidence or fair process may result in a claim.
Early Performance Management Under the New Rules
The first six months of employment will become a critical period.
Best practice includes:
- Written job descriptions and objectives.
- Regular documented check-ins.
- Clear evidence of performance concerns.
- Reasonable time and support to improve.
- Consistent treatment across employees.
Even small businesses need to be able to show that decisions were fair and reasonable.
Practical Steps to Prepare for the 2027 Unfair Dismissal Changes
1. Review Employment Contracts
Check probation clauses, notice provisions, and flexibility to extend probation where necessary.
2. Strengthen Onboarding and Review Processes
Introduce structured reviews at:
- One month
- Three months
- Five months
3. Audit Dismissal Practices
Ask:
- Are reasons for dismissal clearly documented?
- Is there evidence of meetings and feedback?
- Are managers consistent in their approach?
4. Train Managers on Fair Dismissal Principles
Managers should understand fair reasons for dismissal, procedural fairness, and when to seek advice before ending employment.
FAQs on the 2027 Unfair Dismissal Reform
When does the unfair dismissal qualifying period change?
It reduces to six months from 1 January 2027.
Do existing employees still need two years’ service?
No. Employees with six months’ service when the new law applies will qualify for protection.
Will this affect probation periods?
Yes. Six-month probation periods will align closely with the new qualifying threshold.
Does discrimination law change?
No. Discrimination and automatically unfair dismissal claims remain day one rights.
How We Can Help
The reduction in the unfair dismissal qualifying period affects both your existing workforce and anyone you recruit before 2027.
We support SMEs without in-house HR, as well as those needing guidance in complex situations. Our focus is practical, proportionate support that reduces unfair dismissal risk across your whole organisation.
We can help you:
- Review and update employment contracts and probation clauses
- Audit how you manage performance and dismissals
- Strengthen processes for managing existing employees
- Train managers on fair dismissal principles and documentation standards
- Advise on specific cases before dismissal decisions are made
- Provide ongoing outsourced HR support
A structured review now will help ensure your processes are ready for the six-month qualifying framework.
Final Thoughts
Reducing the unfair dismissal qualifying period from two years to six months narrows the margin for error and increases the importance of getting early-stage dismissals right. Many employees already in post will fall within protection once the new regime applies, even if they have not reached two years’ service. Strengthening your probation, performance management, and dismissal processes now will reduce risk across your entire workforce and make future decisions easier to justify.
For official guidance, see:
Call to Action
The move from a two-year to a six-month qualifying period affects both existing employees and future recruits.
Now is the time to review:
- How you manage current staff
- Your probation and performance processes
- Your recruitment and onboarding practices
- Your manager training and documentation standards
If you would like support preparing your business for the 2027 unfair dismissal reforms, speak to our HR team. Acting now will help protect your organisation under the new six-month regime and give you confidence in your approach.
Cousins Group
As a fast-paced growing business, we needed an HR consultancy that could proactively support us both remotely and on-site. Bespoke HR has provided this and we’ve now worked together for years. As a result, we’ve outsourced our entire HR function. Our HR Consultant supports us with everything from resourcing and employee engagement to employee relations and upskilling our middle managers. We would recommend Bespoke HR to anyone needing HR support.