From 1 January 2027, employees are expected to gain protection against ordinary unfair dismissal after six months’ service rather than two years. At the same time, the current cap on compensatory awards for unfair dismissal claims is set to be removed.
For employers, this means less time to identify performance issues, address concerns, carry out probation reviews and make employment decisions before unfair dismissal rights apply.
While 2027 may seem some way off, many existing employees could automatically gain protection on 1 January 2027. Businesses should therefore start reviewing their contracts, probation procedures, manager training and HR documentation now.
In this guide, we explain what is changing, why it matters and the practical steps employers can take to prepare.
Key Takeaway
From 1 January 2027, the qualifying period for ordinary unfair dismissal claims is expected to reduce from two years to six months. Employers should review probation procedures, manager training, employment contracts and HR documentation before the changes take effect.
Unfair Dismissal Changes 2027: At a Glance
| Change | Current Position | Expected From 1 January 2027 |
| Qualifying period for ordinary unfair dismissal | 2 years | 6 months |
| Right to request written reasons for dismissal | 2 years | 6 months |
| Compensation cap | Statutory cap applies | Cap removed |
| Probation period impact | Internal company process | No effect on statutory rights |
Free Employment Law Readiness Checklist
Not sure whether your contracts, probation periods or HR processes are ready for the 2027 changes?
Download our free Employment Law Readiness Checklist and identify any areas that may need attention before the new rules take effect.
What Are the Unfair Dismissal Changes in 2027?
The Employment Rights Act 2025 introduces significant changes to unfair dismissal rights.
The most notable changes for employers are:
- The qualifying period for ordinary unfair dismissal claims is expected to reduce from two years to six months.
- Employees will gain the right to request written reasons for dismissal after six months’ service rather than two years.
- The current cap on compensatory awards for unfair dismissal claims is expected to be removed.
- Existing day-one rights, such as protection from discrimination and automatically unfair dismissal, remain unchanged.
The reduction in the qualifying period means employees will gain protection much earlier in their employment than they do today.
Employers will still be able to dismiss employees where there is a fair reason, such as capability, conduct, redundancy, statutory restriction or some other substantial reason. However, employers will need to demonstrate that they acted reasonably and followed a fair process once an employee gains unfair dismissal protection.
For official guidance, employers should review:
Why Employers Should Care
The biggest issue is not necessarily the legal change itself.
The real challenge is the reduction in time available to identify concerns, provide support, document issues and make decisions.
Many employers have historically viewed the first two years of employment as a lower-risk period. From 2027, that period effectively reduces to six months.
For employers, this means:
- Performance concerns need to be identified earlier.
- Managers need to provide regular feedback.
- Probation reviews become more important.
- Documentation needs to be accurate and consistent.
- Difficult conversations should not be delayed.
Businesses that rely heavily on informal discussions, undocumented conversations or inconsistent management practices may find themselves exposed to unnecessary risk.
At Crystal HR & Payroll, we regularly support employers with employment contracts, probation reviews, disciplinary procedures and HR documentation.
In our experience, employment disputes rarely arise because employers intentionally ignore employment law. More often, problems occur because processes are informal, documentation is inconsistent or managers have not been given the tools they need to manage issues effectively.
The 2027 changes make those fundamentals even more important.
You can find more information on our HR Outsourcing Services | Affordable, Flexible HR Support page
Existing Employees Could Gain Protection Immediately
One aspect of the changes that many employers overlook is that they may affect existing employees as well as new starters.
For example:
| Employee Start Date | Service on 31 December 2026 | Expected Protection Date |
| 1 July 2026 | 6 months | 1 January 2027 |
| 1 March 2026 | 10 months | 1 January 2027 |
| 1 March 2025 | 22 months | 1 January 2027 |
| 1 October 2026 | 3 months | Around April 2027 |
This means employers should not focus solely on future recruitment. Existing teams may also be affected.
Probation Periods Will Matter More Than Ever
One of the most common misconceptions is that probation periods and unfair dismissal rights are linked.
They are not.
A probation period is a contractual arrangement between employer and employee. Statutory unfair dismissal rights are determined by employment legislation.
This means extending a probation period does not extend or delay an employee’s legal unfair dismissal rights.
For many employers, this will mean reviewing:
- Probation policies
- Review meetings
- Manager training
- Performance documentation
- Recruitment procedures
The businesses most likely to adapt successfully will be those that establish clear expectations from day one and conduct regular documented reviews throughout employment.
Common Employer Mistakes
Based on our experience working with employers, the most common problems are usually management issues rather than legal issues.
Not Holding Probation Reviews
Many businesses have probation periods written into contracts but never carry out formal reviews.
Keeping No Written Records
Employers often have conversations but fail to record what was discussed, what concerns were raised and what actions were agreed.
Delaying Difficult Conversations
Small concerns rarely improve simply because they are ignored.
Assuming Probation Provides Complete Protection
Probation remains useful, but it does not override statutory employment rights.
Failing to Train Managers
Managers are often responsible for recruitment, performance management and dismissal decisions, yet many have never received formal training.
Practical Steps Employers Should Take Before 2027
The good news is that employers do not need to panic.
Most organisations can significantly reduce risk by taking practical action now.
Review Employment Contracts
Check whether your contracts, offer letters and HR documentation remain fit for purpose.
Review Probation Procedures
Ensure probation reviews are scheduled, documented and completed consistently.
Train Managers
Managers should understand how to manage performance issues fairly and confidently.
Improve Record Keeping
Maintain clear records of meetings, objectives, concerns and outcomes.
Update Policies and Handbooks
Review disciplinary, capability and dismissal procedures to ensure they remain appropriate.
Review Recruitment Processes
The cost of recruiting the wrong person is likely to increase, making effective recruitment even more important.
Need a Second Opinion?
If you’re unsure whether your current processes would stand up to scrutiny, consider booking a free Employment Law Readiness Review with Crystal HR & Payroll.
Alternately, check out our guide to help you understand The HR and Payroll Data Check Every Employer Should Do in 2026
Timeline: What Employers Should Do Next
Summer 2026
Review contracts, policies and probation procedures.
Autumn 2026
Train managers and update documentation.
Before 31 December 2026
Ensure HR documentation reflects the upcoming changes.
From 1 January 2027
Operate on the basis that employees may gain unfair dismissal protection after six months’ service.
Frequently Asked Questions
Is unfair dismissal becoming a day-one right?
No. The qualifying period for ordinary unfair dismissal is expected to reduce from two years to six months, not day one.
Can I still dismiss an employee during probation?
Yes. However, employers should ensure there is a fair reason and fair process where unfair dismissal rights apply.
Does extending probation extend unfair dismissal rights?
No. Probation periods and statutory employment rights are separate.
Will compensation awards increase?
Potentially. The proposed removal of the compensation cap increases potential exposure in some cases.
Do the changes affect existing employees?
Potentially yes. Employees with sufficient service on 1 January 2027 may gain protection under the new rules.
Should small businesses be worried?
Not necessarily. Most employers can significantly reduce risk through good recruitment, effective management, clear documentation and consistent processes.
Free Download: 2027 Employment Law Readiness Checklist
To help employers prepare, we have created a free Employment Law Readiness Checklist covering:
- Employment contracts
- Probation procedures
- Staff handbooks
- Manager training
- Documentation processes
- Recruitment procedures
Download the checklist and identify any areas that may require attention before the changes take effect.
Need Help Preparing for the 2027 Changes?
The 2027 unfair dismissal changes do not mean employers cannot dismiss employees.
What they do mean is that employers will need stronger processes, better documentation and more consistent people management much earlier in the employment relationship.
Whether you need help reviewing employment contracts, updating your handbook, improving probation procedures or strengthening your HR processes, Crystal HR & Payroll can help.
Don't forget to download your free Employment Law Readiness Workbook
