Unfair Dismissal from January 2027: What the Six Month Qualifying Period Changes

For more than a decade, employees in England and Wales have needed two years of continuous service before they could bring an ordinary claim for unfair dismissal. On 1 January 2027 that changes. Under the Employment Rights Act 2025, the qualifying period falls to six months, and the cap on the compensatory award for unfair dismissal is set to be removed.

It is one of the most significant shifts in employment law in a generation, and it arrives at the end of a year in which several other parts of the 2025 Act have already come into force. This article explains what is changing, how the new rules are expected to operate and where the reform sits within the wider programme.

How we got here

The Employment Rights Act 2025 received Royal Assent on 18 December 2025. When the legislation was first introduced as a Bill in October 2024, its headline proposal was to make protection from unfair dismissal a day one right, removing the qualifying period altogether.

That proposal did not survive the parliamentary process. Following sustained debate in the House of Lords, the government agreed a compromise: a qualifying period would remain, but it would be reduced from two years to six months. The government’s implementation timetable, updated in February 2026, confirmed that the change would apply from 1 January 2027.

What the change means in practice

The current two year qualifying period has applied since April 2012. From 1 January 2027, the reduced period applies to dismissals where the effective date of termination falls on or after that date.

Because the new threshold is measured by length of service at the point of dismissal, its reach extends back into 2026. An employee who started work on or after 1 July 2026 will reach six months of service during the first half of 2027 and will therefore be protected under the new rules, even though they joined while the two year period still applied. A significant number of people recruited during 2025 and 2026 will gain unfair dismissal protection overnight on 1 January.

The reform does not change what makes a dismissal fair or unfair. Employers will still need a potentially fair reason, such as conduct, capability or redundancy, and will still need to act reasonably in treating that reason as sufficient for dismissal. What changes is the point at which that legal test starts to apply.

The removal of the compensation cap

Alongside the shorter qualifying period, the 2025 Act removes the statutory cap on the compensatory award for unfair dismissal. Under the current framework, which applies until the change takes effect, that award is limited to the lower of a fixed sum or a year’s pay.

Removing the cap means that, for higher earners in particular, the financial exposure attached to an unfair dismissal claim will look much more like that already seen in discrimination and whistleblowing claims, where compensation has never been capped.

The role of probation

Much of the commentary on the reform has focused on probationary periods, and on how far probation can operate as a genuine assessment phase once full protection follows so soon afterwards.

Changes already in force

The January reform follows several others that have already taken effect during 2026:

• April 2026. Changes to statutory sick pay, day one rights to paternity leave and unpaid parental leave, and the launch of the Fair Work Agency.
• 1 October 2026. The time limit for bringing most employment tribunal claims doubled from three months to six months, for events on or after that date.
• 30 October 2026. A strengthened duty on employers to take all reasonable steps to prevent sexual harassment, new liability for harassment by third parties, and new trade union access rights.

Taken together with the extension of the Acas early conciliation period to twelve weeks in December 2025, the combined effect is that the window between a workplace event and a tribunal claim is now considerably longer than it was a year ago.

What else is due in 2027

January 2027 is also the date given in the government timetable for new restrictions on so called fire and rehire practices, which limit the circumstances in which dismissing and re engaging employees to change their contractual terms will be treated as fair. Further measures expected during 2027 include new rights for workers on zero and low hours contracts and changes to the way flexible working requests are assessed.

Why this matters to employers and employees

For employers, the reform changes the risk profile of the early months of employment, which have previously been largely outside the scope of unfair dismissal law. Recruitment, onboarding, probation reviews and the way performance concerns are recorded are all likely to receive more attention.

For employees, it brings meaningful protection at a much earlier stage. Someone who changes jobs will no longer spend two years without the right to challenge a dismissal they believe to be unfair.

How Gordons Partnership can help

Our employment law team works with employers and employees on contracts, policies, workplace investigations, disputes and terminations. If you would like to talk through how the Employment Rights Act 2025 affects your organisation or your own position, get in touch with our team.

This article is for general information only and does not constitute legal advice.