We have long been expecting changes to the qualifying period for unfair dismissal claims (see the News section dated July 2026). This will be one of several significant changes affecting employers from January 2027.
From 1st Jan 2027, employers will have a much shorter period to decide whether a new hire is working out. The qualifying period for unfair dismissal will reduce from two years to six months. This means it’s critical that organisations ensure that probationary processes and reviews are robustly carried out and used as an effective tool to address performance and suitability concerns.
Secondly, on the same date, the compensation cap for unfair dismissal will be removed, resulting in significantly greater exposure when senior or highly paid employees are involved. Compensation will remain loss-based, but if a senior employee takes a significant amount of time to secure a suitable new role, the compensation payable could increase substantially.
Thirdly, there have been changes to the legislation on dismissal and re-engagement (often referred to as ‘fire and rehire’). Employees who refuse certain “restricted variations” will be protected because any resulting dismissal will be considered automatically unfair.
If your business needs support in implementing and managing the impact of these changes, please get in touch and we will be happy to provide practical guidance and advice.