What the 6-Month Unfair Dismissal Rule Means for You (January 2027)

From 1 January 2027, the qualifying period for ordinary unfair dismissal claims will drop from two years to just six months. This is the most significant change to individual employment rights in decades, and it will fundamentally alter the balance of power between employers and employees in the early stages of employment.

The Current Rule

Under the current law (Employment Rights Act 1996, as amended), you need at least two years' continuous service before you can bring an ordinary unfair dismissal claim. This means that during the first two years, your employer can dismiss you for almost any reason — or no reason at all — without you being able to challenge it at tribunal. The only exceptions are "automatically unfair" dismissals (such as those related to pregnancy, whistleblowing, or asserting statutory rights) and discrimination claims, which have no qualifying period.

In practice, this two-year window has given employers significant latitude. Many employees report being let go just before their two-year anniversary, and there is little recourse in most cases.

What Changes on 1 January 2027

The Employment Rights Act 2025 reduces the qualifying period to six months. Employees who start work on or after 2 July 2026 will gain unfair dismissal protection on 1 January 2027 (when they reach six months' service). For employees already in post, the new six-month threshold applies to their accrued service — meaning many workers who currently have between six months and two years' service will gain protection immediately.

The government has indicated there may be a lighter-touch "initial period of employment" process for dismissals in the first six months to nine months, to allow employers to end probationary arrangements fairly. But once six months' service is reached, the full protections of unfair dismissal law apply.

Uncapped Compensation

Alongside the qualifying period change, the compensation cap for unfair dismissal is being abolished. Currently, the compensatory award is capped at the lower of 52 weeks' gross pay or £118,223. From January 2027, there will be no cap — the tribunal will award whatever it considers just and equitable, in line with the approach already used for discrimination claims. This dramatically increases the potential liability for employers who dismiss unfairly.

Who Is Affected?

Every employee and every employer in the UK. Employees who have been in their role for more than six months but less than two years will gain protection they did not previously have. This is estimated to cover millions of workers. For employees, this means greater security and a stronger position if they are dismissed without a fair reason or fair process.

For employers, the message is clear: the days of treating the first two years as a "free pass" are ending. Fair processes — proper performance management, genuine probation reviews, documented decision-making — will need to be in place much earlier.

What Employers Should Do Now

If you manage staff, start preparing now. Review your probation processes, ensure managers understand what constitutes a fair dismissal, and invest in proper onboarding. From January 2027, an employee dismissed at seven months with no process and no documented reason will have a tribunal claim — and there will be no compensation cap to limit the exposure.

The shift from two years to six months is not just a technical legal change. It is a fundamental rebalancing of employment rights in the UK, and both employers and employees need to be ready.