Unfair dismissal at six months, from January 2027

Alan Creevy, Founder · 23rd August 2026 · updated 27th October 2026

If you employ people in the UK, one date matters more than the rest of the Employment Rights Act put together. On 1st January 2027 two things happen at once, a third is expected in March, and together they change the arithmetic of every dismissal you make.

What actually changes

The government’s implementation timeline confirms the first two for 1st January 2027 and, since its update on 22nd October 2026, puts the third in March 2027.

The qualifying period drops from two years to six months. Today an employee generally needs two years’ service before they can bring an ordinary unfair dismissal claim. From January they need six months.

The scale of that is in the government’s own unfair dismissal factsheet: around 6.3 million employees, 22% of everyone in work, have been with their current employer for between six months and two years. That is not a rough proxy for the affected group. That is exactly the group, and on 1st January every one of them acquires a right they do not have today.

The cap on the compensatory award is removed entirely. Compensation for ordinary unfair dismissal is currently capped at the lower of 52 weeks’ pay or a statutory maximum, which rose to just over £123,000 on 6th April 2026. That ceiling is not being raised. It is being removed.

Dismissing someone and taking them back on worse terms becomes automatically unfair. The same government timeline now puts fire and rehire protections in March 2027. They were originally expected in October 2026, were moved back to January to sit alongside the other dismissal reforms, and were moved back again on 22nd October 2026. What that means for an employer who needs to change someone’s terms is in what to do when they will not agree to a contract change.

For the first two, the test is the effective date of termination. If that falls on or after 1st January 2027, the new rules apply.

Why the cap matters more than the qualifying period

Most coverage leads on the six months. The removal of the cap is the part that changes behaviour.

Consider the shape of the risk honestly. In the most recent published tribunal statistics, covering 2023/24, the median unfair dismissal award was £6,746 and the mean was £14,000. Those are not numbers that keep anyone awake.

But the median is not the risk. The maximum award in that same year was £179,000, and from January there is no ceiling on it at all. What used to be a bounded downside becomes an open one, and a risk with no ceiling is priced differently by anyone advising you.

The other cost is the one nobody quotes accurately. The best available figure comes from the government’s own Survey of Employment Tribunal Applications, which found a median of £5,000 spent by employers who paid for advice or representation. That survey is from 2018 and no more recent round has been published, so treat it as a floor rather than a current estimate. Either way it lands whether you win or lose.

The cliff edge nobody is talking about

There was going to be a softer version of this. The original proposal paired day one unfair dismissal rights with a statutory initial period, widely reported at nine months, during which a lighter touch dismissal process would apply.

That is not what happened. In an update published on 27th November 2025, the government moved to a straightforward qualifying period of six months and confirmed the compensation cap would be lifted. There is no statutory probationary period in the final position and no separate lighter process written into law. What you get is a clean line: no ordinary unfair dismissal rights below six months, full rights at six months.

This matters because a good deal of advice still circulating describes that nine month version as though it were coming. If your handbook or your last legal update mentions it, it is describing a proposal that was superseded nine months ago.

What to do between now and January

The January 2027 employer checklist puts all of this in one list, and can email you a reminder of each step as the date gets closer.

Know where everyone sits. You need a list of who passes six months’ service before 1st January and who passes it after. That is the line between two different legal regimes, not an HR nicety.

Make probation decisions on time. If someone is not working out, the decision needs making and evidencing while you still have room. Drifting past six months because nobody wanted the conversation is now an expensive way to avoid an awkward afternoon. The probation period calculator shows, for any start date, when probation ends and when the six month rule applies.

Fix the record, not just the process. A fair dismissal is one you can evidence: what the concern was, when you raised it, what support you offered, what happened next. Most employers who lose do not lose because they were unfair. They lose because a year later nobody can prove what was said in a meeting nobody minuted.

Assume a longer tail. Since 1st October 2026 the time limit for bringing most tribunal claims has been six months rather than three. Add Acas early conciliation, which can now run up to 12 weeks, and the realistic period during which a claim can land stretches close to nine months from the event. Your notes need to survive that and still make sense to someone who was not there.

The honest summary

None of this makes dismissing someone impossible. It makes doing it carelessly considerably more expensive, and it moves the point at which carelessness starts to count from two years down to six months.

One thing that catches employers out in practice: a shorter qualifying period matters most when something interrupts a process you have already started. If somebody goes off sick partway through, see what to do when someone is signed off with stress after a performance conversation.

Tarn.hr provides HR guidance based on UK employment law and Acas codes of practice. It does not constitute legal advice and should not be relied upon as such. Employment law is complex and turns on the facts of each case. For any situation involving significant legal risk, potential tribunal claims, or matters of particular sensitivity, you should seek advice from a qualified employment solicitor. Tarn.hr is not responsible for any decisions made on the basis of its guidance.