Unfair dismissal qualifying period changes 2027

For any dismissal where employment ends on or after 1 January 2027, an employee needs six months' continuous service to claim ordinary unfair dismissal instead of two years (Employment Rights Act 2025 s.25; S.I. 2026/559). Service counts from the first day, so six months are complete on the day before the six-month anniversary. Anyone who started on or before 2 July 2026 is protected from 1 January 2027. The cap on the compensatory award is removed the same day.

Since April 2012 the rule of thumb for small employers has been “two years”: with less service, an employee generally could not claim ordinary unfair dismissal. From 1 January 2027 the figure is six months, and it applies to people already on your payroll.

What the law now says

Section 108(1) of the Employment Rights Act 1996 says the right not to be unfairly dismissed does not apply unless the employee has been continuously employed for a qualifying period ending with the effective date of termination. Section 25 of the Employment Rights Act 2025 replaces “two years” with “six months” and repeals section 124, the cap on the compensatory award. Schedule 3 also cuts the qualifying period for a written statement of reasons for dismissal (section 92) from two years to six months.

S.I. 2026/559 brings all of this into force on 1 January 2027, with one transitional rule in regulation 4:

  • the new rules apply where an employee is dismissed before 1 January 2027 but the effective date of termination falls on or after that date;
  • they do not apply where the effective date of termination is before 1 January 2027.

So the date that matters is when employment ends, not when the decision is made or notice is given.

Counting six months

Continuous employment begins with the day the employee starts work (section 211). Because the first day counts, six months are complete on the day before the six-month anniversary. The Court of Session took the same approach to counting in Pacitti Jones v O’Brien (2005).

Started Six months complete Protected for employment ending on or after
1 March 2026 31 August 2026 1 January 2027 (changeover)
1 July 2026 31 December 2026 1 January 2027 (changeover)
2 July 2026 1 January 2027 1 January 2027
31 August 2026 28 February 2027 28 February 2027
15 January 2027 14 July 2027 14 July 2027
1 January 2025 — 31 December 2026 (two-year rule)

The last row shows the overlap: someone who reaches two years before 1 January 2027 was already protected under the old rule.

Month-end starts are an edge case. Where the later month has no matching date — a start on 31 August, or on 29 February — Wallchart treats the period as ending on the last day of the shorter month. There is little case law on this, so allow a margin.

Try any start date:

Protected from unfair dismissal for employment ending on or after Friday, 1 January 2027

Six months’ service complete
31 December 2026 — counts only where employment ends on or after 1 January 2027
Two years’ service complete
30 June 2028 — the rule for employment ending before 1 January 2027
Which rule gives the date
The changeover: six months are complete before 1 January 2027, so protection starts on that date.
Ending without statutory notice
The statutory week’s notice is added when counting service (ERA 1996 s.97(2)), so an ending on or after 25 December 2026 also counts.

Statutory notice can bring the date forward

Section 97(2) adds a twist. If the employer ends employment without giving the statutory minimum notice — one week once someone has worked a month — the notice that should have been given is added to the effective date of termination for the purposes of section 108(1). In practice, ending someone’s employment without notice up to a week before their six-month date can still give them six months’ service. Wallchart shows this “without notice” date for each person.

What “protected” means

Once the qualifying period is met, a dismissal must be for a potentially fair reason under section 98 — capability, conduct, redundancy, statutory illegality or some other substantial reason — and the employer must act reasonably, which in practice means following a fair procedure and the Acas Code of Practice on disciplinary and grievance procedures for conduct and performance cases.

From 1 January 2027 the compensatory award is also uncapped. Before, the cap was the lower of 52 weeks’ gross pay or a fixed statutory figure, which limited the exposure on lower-paid staff. Now the award reflects the actual loss.

Rights that never needed service

These are unchanged and apply from day one:

  • protection from discrimination under the Equality Act 2010;
  • automatically unfair dismissal for reasons such as whistleblowing, pregnancy and maternity, asserting a statutory right, health and safety activities, and trade union membership;
  • planned for early 2027 (GOV.UK says March 2027, Acas January): dismissal for refusing a “restricted variation” (fire and rehire), which will be automatically unfair under new section 104I.

What to do before 1 January 2027

  1. List every employee’s protection date. Add start dates to the staff dates tool; it shows the date under whichever rule applies.
  2. Bring probation reviews forward. A probation review that ends at six months leaves no time to extend. See probation periods after the Employment Rights Act.
  3. Train whoever manages people. After six months, performance and conduct problems need the same process as for long-serving staff.
  4. Update documents that say “two years” — the handbook, the disciplinary procedure and contracts. See updating employment contracts for 2026/27.

Acas puts it bluntly: employers might want probation to end before protection starts, but that does not avoid legal risk. Treat the six-month date as the point where good management needs to be visible on paper.

Frequently asked questions

If I give notice in December 2026, which rule applies?

It depends on when employment ends. S.I. 2026/559 regs 3–4 apply the six-month rule where someone is dismissed before 1 January 2027 but the effective date of termination falls on or after that date.

Is unfair dismissal now a day-one right?

No. The Bill originally proposed day-one protection with an initial period, but the Act as passed sets a six-month qualifying period. Automatically unfair reasons and discrimination were already day-one protections and still are.

What does the compensation cap change mean?

Section 124 of the Employment Rights Act 1996, which capped the compensatory award at the lower of 52 weeks' pay or a fixed figure, is repealed from 1 January 2027. Tribunals will award what the loss actually is.

Can the six months be changed again by regulations?

No. Section 25(4) removes section 108(1) from the list of provisions ministers can amend by order, so a change would need a new Act of Parliament.

Sources

  1. Employment Rights Act 2025, section 25
  2. Employment Rights Act 2025, Schedule 3
  3. S.I. 2026/559 — Commencement No. 4 and Transitional and Saving Provisions
  4. Employment Rights Act 1996, s.97 (effective date of termination)
  5. Employment Rights Act 1996, s.98 (fairness)
  6. Employment Rights Act 1996, s.211 (period of continuous employment)
  7. GOV.UK — An update on the Employment Rights Bill (27 November 2025)
  8. Acas — Probation periods
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