5 March 2026
The Employment Rights Act 1996 affords employees who have two years or more continuous employment the protection from being unfairly dismissed. This qualifying period has long been seen as striking a balance between protecting employees and allowing employers flexibility in the early stages of employment. The current Government recently proposed a significant shift to this framework as part of its wider programme of employment law reform under the Employment Rights Act 2025 (ERA 2025).
The Government is also proposing to increase the time limit for bringing unfair dismissal claims from 3 months to 6 months in October 2026. The Government will also strengthen protections against dismissal for expecting and new parents including maternity/paternity, adoption, bereavement and neonatal care leave.
Qualifying period for ordinary unfair dismissal
Whilst the Government’s manifesto initially proposed removal of the qualifying period, making it a ‘Day One’ right not to be unfairly dismissed, a compromise has been reached. The qualifying period for ordinary unfair dismissal will be reduced from two years (as it currently stands) to six months, which means employees will gain protection much earlier than under the current law. The impact also means employers will retain a limited period in which to assess suitability of employees without exposure to such claims. It is envisaged that the changes will come into force from 1 January 2027.
Cap removed on compensation for unfair dismissal award
The statutory cap on unfair dismissal compensation, currently the lower of 52 weeks’ gross pay or £118,223, will also be removed. This change places heightened vulnerability and exposure to employers. This is also expected to come into force on 1 January 2027.
Practical implications for employers
When brought into force, the changes will have real practical consequences. Employers will need to manage probationary periods, performance concerns and termination decisions more carefully, particularly after an employee reaches six months’ continuous employment. Clear documentation, timely reviews and fair processes will become increasingly important at an earlier stage of employment. Businesses that rely on longer probationary periods may also wish to review their contracts and internal procedures to ensure they remain effective in view of the changes.
What should employers do now
Although the reform is not yet law, the direction of travel is clear. Employers should start preparing for a reduced qualifying period and consider whether their current practices are fit for the changes coming into play early next year.
If you would like advice on how these proposed changes could affect your organisation, or support reviewing your employment contracts and procedures, you can contact our Employment team on 020 3814 2020 or email employment@blasermills.co.uk. Alternatively, fill in our contact form.