Unfair dismissal: the qualifying-period change
The qualifying period for ordinary unfair dismissal falls from two years to six months on 1 January 2027, and the compensation cap is removed the same day. Coverage depends on the dismissal date, not the hire date: anyone dismissed on or after 1 January 2027 needs only six months' service.
Employees currently need two years' continuous service before they can bring an ordinary unfair dismissal claim. From 1 January 2027, that falls to six months under section 25 of the Employment Rights Act 2025. An earlier proposal for a separate, lighter-touch dismissal process during an initial period of employment was dropped before Royal Assent, so the final law is a flat six-month qualifying period with no separate statutory probation regime, which makes an employer's own contractual probation period more important in practice. The unfair dismissal compensation cap is abolished the same day, so awards after that date are based solely on actual financial loss. Coverage turns on the dismissal's effective date of termination, not the employee's hire date: dismissals before 1 January 2027 still need the old two years, and dismissals on or after that date need only six months, regardless of when the employee started.
What is the qualifying period today, and what does it become?
Today it is two years' continuous service. From 1 January 2027 it falls to six months, under section 25 of the Act, commenced by the Employment Rights Act 2025 (Commencement No. 4) Regulations 2026.
Is there a separate light-touch process for new starters?
No. An earlier draft of the Bill floated a modified dismissal process during an initial period of up to nine months, but that idea was dropped before Royal Assent. The final law is a flat six-month qualifying period, nothing more.
Who is covered, and from when?
Coverage depends on the dismissal's effective date of termination, not the employee's start date. Anyone dismissed before 1 January 2027 still needs two years' service; anyone dismissed on or after that date needs only six months. Because six months before 1 January 2027 is 1 July 2026, anyone continuously employed by that date already has the qualifying service the moment the law changes.
Who handles this if you hire through Teamed?
Termination decisions for your UK team already go through Teamed's compliance process today, using the current qualifying period. When the reduced six-month threshold lands in January 2027, we apply it automatically to every dismissal, so you're never relying on an outdated rule of thumb about who can and can't claim unfair dismissal.
Key figures
| Detail | Value |
|---|---|
| Current law | Employees currently need 2 years continuous service to bring an ordinary unfair dismissal claim, under section 108 of the Employment Rights Act 1996. (source) |
| The change and its exact commencement date | Section 25, Employment Rights Act 2025 reduces the qualifying period to 6 months. The Employment Rights Act 2025 (Commencement No. 4) Regulations 2026 (SI 2026/559) commence the remainder of section 25 and Schedule 3 on 1 January 2027; a narrower transitional provision was brought into force earlier, on 1 July 2026. (source) |
| No separate light-touch initial-period process | Earlier drafts of the Bill floated a modified, lighter-touch dismissal process during a statutory initial period of employment (up to 9 months). That concept was dropped before Royal Assent. The final Act sets a flat 6-month qualifying period with no separate statutory probation regime, which makes employers' own contractual probation periods more significant in practice. (source) |
| Removal of the compensation cap | The cap on the unfair dismissal compensatory award is removed from 1 January 2027, the same date as the qualifying-period change. Immediately before removal (from 6 April 2026), the cap stood at the lower of £123,543 or 52 weeks gross pay, up from £118,223. After removal, awards are based solely on actual financial loss subject to mitigation. (source) |
| Mechanics of who is covered: dismissal date, not hire date | Coverage is not determined by a hire-date cut-off. SI 2026/559 sets transitional provisions by reference to whether the effective date of termination falls before, or on/after, 1 January 2027: dismissals before that date still need the old 2 years service; those on or after need only 6 months. Because 1 January 2027 minus 6 months is 1 July 2026, anyone continuously employed on or before 1 July 2026 already holds the requisite 6 months service the moment the new law takes effect. (source) |
Frequently asked questions
Does this apply to everyone hired before 2026?
It applies based on when someone is dismissed, not when they were hired. Anyone dismissed on or after 1 January 2027 needs only six months' service by that point, whenever they started.
Is there still a compensation cap after January 2027?
No. The cap on the unfair dismissal compensatory award is removed on the same date the qualifying period changes, so awards are based on actual financial loss rather than a statutory ceiling.
Should I still use a probation period?
Yes. Since the statutory light-touch process was dropped, your own contractual probation period is one of the few practical tools left for managing a new hire's first months, though it does not itself extend the statutory qualifying period.
UK employment law is moving fast, and commencement dates have slipped before. When Teamed is your legal employer, we track every change and update your contracts, policies and payroll as the law lands, so you never have to read a roadmap to stay compliant.
