In brief
- From 1 January 2027, employees gain unfair dismissal rights after six months' service, not two years.
- Anyone continuously employed on or before 1 July 2026 gets unfair dismissal protection from 1 January 2027.
- Six-month probationary periods no longer leave a safe dismissal window, as statutory minimum notice protection can push a decision made shortly before the six-month point into unfair dismissal territory.
- Employers therefore need to make decisions far sooner about whether an employee should be kept on past their probationary period, if they wish to avoid the risk of an unfair dismissal claim.
- Employers should tighten their probationary processes to ensure they actively review the new joiner's progress during probation and make a decision whether to keep or terminate them before they acquire unfair dismissal rights.
Background
Unfair dismissal is a statutory right that protects employees from being dismissed without a fair reason and a fair process, but an employee must first complete a minimum qualifying period of continuous service before they qualify for the right (unless they are dismissed for an 'automatically unfair' reason such as whistleblowing or maternity leave, in which case they are protected from 'day one'). At present, the qualifying period is two years.
The length of the qualifying period has ranged between six months and two years over the past half century, with Conservative Governments consistently favouring a longer period and Labour Governments a shorter one. The current Labour Government had originally intended to make unfair dismissal a 'day one' right, but following a "series of constructive conversations" between trade unions and business representatives, the Government eventually compromised on a six-month qualifying period. This change, which still marks a substantial reduction from the current two year threshold, is just one of the major changes introduced by the Employment Rights Act 2025 (ERA 2025) which we cover in our Employment Rights Act Hub.
Changes to the qualifying period have typically been made by secondary legislation (statutory instruments) rather than primary legislation. The ERA 2025 goes a step further: it removes the power to vary the qualifying period by secondary legislation altogether, meaning any future Government wishing to lengthen the period will need to pass primary legislation to do so - a significantly higher bar.
What is changing and when?
The new six-month qualifying period comes into force on 1 January 2027. Any employee who has been continuously employed for at least six months at the date of their dismissal will be entitled to protection from unfair dismissal. In practice, this means that any employee employed on or before 1 July 2026 will already have accrued the requisite six months' service by the time the change takes effect. For example, an employee hired on 1 May 2026 will have eight months' service by 1 January 2027 and will be able to claim unfair dismissal from that date.
Increase in tribunal claims
In its ERA 2025 Economic Analysis, dated January 2026, the Government estimates that around 6.3 million employees (approximately 22% of those aged 16 and over) have between six months' and two years' service with their current employer, and will benefit from the increased job security the change brings.
Together with the additional ERA 2025 unfair dismissal reform to remove the compensation cap on unfair dismissal claims (as we discuss in a forthcoming article in this series), the Government expects the reduction in the qualifying period to generate around 9,000 additional Acas early conciliation cases and approximately 3,000 additional Employment Tribunal claims per year, making these reforms the largest expected driver of increased caseload across all the Employment Rights Act 2025 reforms.
This will clearly have a financial impact on businesses; arising not only from the cost of settlements and the legal costs of handling Acas and Employment Tribunal claims, but also from more resource-intensive dismissal processes. In its Economic Analysis, the Government has acknowledged this and highlighted that small and micro businesses are likely to be disproportionately affected because they are more likely to employ staff with six months to two years' service, are less likely to have formal contractual probationary processes in place, and have more limited HR and legal resources to draw on.
Practical implications for employers
There are a number of practical implications of the reduced qualifying period.
The most immediate impact is on probationary periods. Many employers currently operate six-month probationary periods for new staff, relying on the two-year qualifying period as a buffer that allows them to part ways with a new employee whose performance or conduct has not met expectations, without the risk of an unfair dismissal claim. Under the new regime, that buffer will be significantly reduced, because by six-months, the unfair dismissal right will already be engaged.
Employers would therefore be wise to shorten probationary periods to either no more than five months without any extension, or to four months, with the option of a one-month extension if needed, so that the total does not exceed five months. This preserves a window in which a managed exit remains lower risk, whilst still giving some time to properly assess a new hire. An initial four-month period also provides essential headroom once the statutory minimum notice addition is taken into account (see below).
Probationary periods should also include structured, regular review points. Concerns, training needs and performance issues should be well-documented throughout, so that any decision to dismiss does not come as a surprise to the employee.
An important and frequently misunderstood point concerns the interaction between the qualifying period and statutory minimum notice. Once an employee has completed one month's service, they are entitled to a minimum of one week's statutory minimum notice. Where an employer dismisses without giving that statutory minimum notice, the date used to calculate unfair dismissal qualifying service is deemed to be the date on which the statutory minimum notice would have expired. This applies whether or not the employment contract contains a payment in lieu of notice (PILON) clause and regardless of whether payment in lieu is made. The only exception here is where the employer dismisses because the employee has committed gross misconduct, in which case no statutory minimum notice is added. In practice, this means that an employer who dismisses (or pays in lieu) at five months and three weeks will find that the deemed date of termination for calculating unfair dismissal qualifying service falls one week later. This takes qualifying service past the six-month threshold and the employee will acquire unfair dismissal protection. The safe course for employers is therefore to make the dismissal decision early enough that the six-month qualifying period isn't reached, even after taking into account an extra one week's statutory minimum notice. With a four-month probationary period and a one-month extension, a decision made at or before five months leaves sufficient headroom.
More broadly, employers should review and tighten disciplinary, grievance and performance management processes now, ahead of 1 January 2027. Good processes are the primary defence against an unfair dismissal claim succeeding. Even where an employee has not yet accrued six months' service, it is good practice to follow a minimum process and give a reason for dismissal. An aggrieved employee may still bring claims (for example, discrimination or whistleblowing) that carry no qualifying period, and a poorly handled dismissal increases litigation risk.
Finally, there is a concern that the reduced qualifying period may lead some employers to become more risk-averse in their hiring decisions, potentially to the detriment of candidates who are perceived as less certain to succeed. This carries genuine risks of unconscious (or even conscious) bias in recruitment, which can give rise to discrimination risks. Employers should be alert to this.
Employer action points
- Invest in thorough recruitment processes, including structured interviews, proper reference-checking and robust onboarding programmes. The shorter qualifying period means there is less room to correct a poor hiring decision once an employee is in post.
- Review probationary procedures and update HR policies to reflect the new six-month qualifying period with effect from 1 January 2027.
- Train managers on effective performance and disciplinary management and how to use probationary periods properly. The Acas Code of Practice on Disciplinary and Grievance Procedures sets out the baseline that Employment Tribunals expect employers to have followed. Managers should be familiar with it and understand how to apply it in practice. Equally important is ensuring that training is actually implemented - training that is delivered but not applied is of limited value when a claim is brought.
- Set expectations with a new joiner for performance and conduct clearly and in writing from the start of employment, and follow up promptly when those expectations are not met. Early intervention is key: issues that are left to drift become harder to address fairly and harder to rely on as grounds for dismissal.
- Do not avoid difficult conversations. Concerns that are not clearly communicated cannot be properly understood or acted upon by the employee. An employee who is dismissed without having received clear prior warnings is far more likely to perceive the process as unfair, and far more likely to bring a claim as a result.
- Apply robust employment processes. Ultimately, robust processes, consistent management and fair treatment remain the most effective tools for minimising both the risk of a successful unfair dismissal claim and the wider reputational and operational costs of a contested dismissal. Employers who invest in getting this right now will be well placed when the new regime takes effect in January 2027.
How Mishcon de Reya can help
Our Employment team regularly advises employers on all aspects of the employment lifecycle, from recruitment and onboarding through to performance management, disciplinary processes and dismissals. We can help you review and update your probationary procedures, employment contracts and HR policies ahead of the January 2027 changes, and provide tailored training for managers on how to handle these issues in practice. If you would like to discuss how the reduced qualifying period may affect your business, please get in touch with your usual contact or a member of the Employment team.