UK: Unfair Dismissal: Reforms

Authors: Stephen Miller, Corinna Harris, and Sophie Jackson

The UK Government has confirmed when the unfair dismissal reforms will come into effect.

The UK Government has confirmed two important points relating to the timeline for implementation of the unfair dismissal reforms:

• When the qualifying period for unfair dismissal claims is reduced to six months on 1 January 2027, this will apply immediately meaning that any employee who has already reached six months’ service on that date will benefit from unfair dismissal protection straight away.
• The cap on compensation for unfair dismissal claims will be removed from 1 January 2027 and will apply to dismissals with effect from that date.

Whilst we were expecting this to be the case, it is helpful to get confirmation of the precise timings for these changes, which underlines the importance of employers taking action now to mitigate the impact of the changes.

Key Action Points for Human Resources and In-house Counsel:

There are a number of practical steps employers can take to get ready for these changes. For example, strengthening recruitment, pre-employment screening and onboarding processes, updating employment contracts, policies and procedures, tightening up probation management and training staff. Employers should also be reviewing existing employees who will gain unfair dismissal rights from 1 January 2027 to ensure they are suitable for ongoing employment, especially those who start on or after 1 July 2025.

For more information, please read our detailed update or get in touch with your usual Clyde & Co contact who can talk you through how to get prepared.