With major changes to unfair dismissal rules approaching, employers should start preparing now. Our latest article explains what’s changing and the steps you can take to get ready.
Employees will gain the right to bring an unfair dismissal claim after only six months of service.
On 1 January 2027, any existing employee with six months’ service will automatically gain unfair dismissal rights. Anyone you that you recruited from 01 July 2026 will have the same rights, as they will have six months’ service by this date.
The Act will also remove the cap on the basic award for unfair dismissal claims, increasing the financial risk for employers.
This hugely increases the risk for employers. The flexibility to dismiss underperforming staff within the first two years of employment will be gone. Instead, you will have just six months to assess a new employee’s suitability.
Financial – Effectively managing probation periods is essential. Failure to monitor an employee’s performance and address concerns during this time could increase the risk of an unfair dismissal claim if you decide to terminate their employment after six months.
Greater risk of Employment Tribunal claims – According to TribunalIntel, the current unfair dismissal average payout is £16,500.
Management time – Managing the employee’s performance during and after probation.
Reputational damage – An employee alleging unfair dismissal could damage your business’s reputation and undermine trust among current and prospective employees.
Recruitment processes – Recruitment processes should be robust, fair and consistent, ensuring that every candidate is assessed on their individual merits. Selecting the right person for the role from the outset can reduce the time and resources spent managing performance issues and addressing suitability concerns.
Onboarding – A structured onboarding process, including thorough pre-employment checks and a well-planned induction, helps ensure that new starters understand their role, responsibilities and expectations from day one. This supports a positive start for your new employee.
Probationary period– Employers should address performance concerns promptly and consistently from the start of employment, ensuring that employees receive clear expectations, appropriate support, regular feedback and a reasonable opportunity to improve. Where performance does not meet the required standard, employers should follow a fair, reasonable and properly documented process.
It depends on whether you have followed the correct procedures and managed the employee fairly during this time.
Making snap decisions about an employee reaching 6 months’ service may render your procedure inconsistent and unfair.
Failing to manage performance effectively or follow an appropriate process during the first six months of employment does not remove an employee’s legal rights. Once an employee reaches six months’ service, they will have additional statutory protections and can challenge their dismissal through an Employment Tribunal.
Ensure that you have a thorough recruitment and selection process
Ensure that your onboarding process is effective and comprehensive, including induction and training.
Ensure you have robust probation policies in place, with clear objectives and timescales.
Record objectives and feedback at each check-in, along with support given. Maintaining clear, accurate and up-to-date records to ensure all relevant information is documented.
Recognise and deal with any underperformance at the time.
Assess financial exposure, ensuring employers seek appropriate HR advice before taking dismissal action to help ensure that the decision is lawful, fair and supported by clear evidence.
Review contracts and policies to review probation periods, notice, capability and disciplinary procedures. Ask yourself: do I have a fair and reasonable process?
Review the recruitment process and ensure it is fit for purpose.
Train line managers to manage performance and probationary periods, including how to set clear objectives.
Managing employees effectively helps build a motivated, engaged and productive team, creating the foundations for long-term business success.
To find out more information or to discuss the upcoming unfair dismissal changes, please get in contact with our team of experts.
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