Unfair dismissal after 6 months from January 2027: how small employers should prepare now
From 1 January 2027 the government plans to cut the unfair dismissal qualifying period from 2 years to 6 months and remove the cap on compensation. What that means for probation, performance management and records, and the steps to take before the change.
Published 22 October 2026 · 3 min read
Checked against official guidance on 22 October 2026. This post reflects GOV.UK: Plan to Make Work Pay and Employment Rights Act, timeline update (updated 14 October 2026). Guidance changes, so check the linked pages for the current version. This is information, not legal advice.
What is changing
The government's timeline, updated on 14 October 2026, says that from 1 January 2027 the qualifying period for protection from unfair dismissal will fall from 2 years to 6 months, for dismissals from that date. The cap on the compensatory award for unfair dismissal is also due to be removed in January 2027. Future dates remain subject to Parliament.
Combined with the change on 1 October 2026 that doubled most tribunal time limits from 3 months to 6 months, the risk of an unfair dismissal claim is about to grow sharply for small employers.
Who this affects
Anyone dismissed on or after 1 January 2027 who has 6 months' service. Someone who joined you in July 2026 will have the right to claim from January 2027. In practice, most of your current team will be protected from that date.
Some protections already apply from day one and are unchanged: dismissal for reasons such as pregnancy, whistleblowing, asserting a statutory right, or discrimination has never needed a qualifying period.
What "fair" means
A dismissal is fair when there is a potentially fair reason, such as capability, conduct, redundancy, or a legal restriction, and the employer acted reasonably in treating it as sufficient, including following a fair procedure. For small employers that usually means three things: telling the person clearly what the problem is, giving them a genuine chance to respond or improve, and keeping a record that this happened.
Probation will matter more than ever
Many small businesses use a 6-month probation without really reviewing it, relying on the 2-year rule for protection. After 1 January 2027 that protection disappears at 6 months. Make probation real:
- Set a clear probation period in the written statement, and say what happens at the end.
- Hold reviews at set points, for example 1, 3 and 5 months, with written notes the employee sees.
- Name specific standards the person must meet, with examples.
- Decide before the 6-month point. If you extend probation, do it in writing with reasons and a new end date.
Performance and conduct processes
- Write down what "good" looks like for each role, so a performance concern can be measured against something.
- Raise problems early, in a documented conversation, and give a reasonable time and support to improve.
- Follow a written disciplinary procedure; you must give one within 2 months of the person starting.
- Investigate before deciding, let the person respond, and allow an appeal.
Records will be your defence
With no compensation cap and longer time limits, the question in a tribunal will often be what you can show. Notes of probation reviews, acknowledged performance reviews, warning letters, absence records and the dates of each conversation are what make a dismissal defensible. A decision you cannot evidence is one you will struggle to defend.
Steps to take before January
- Review every employee who will pass 6 months' service in early 2027 and has an unresolved concern.
- Update contracts and the handbook: probation length, review points, disciplinary and grievance procedures.
- Train managers in documented one-to-ones and performance conversations.
- Make sure every review, warning and decision is stored with the employee's record.
How Zetta HR helps
In Zetta HR, managers write reviews privately, share them when ready, and the employee reads and acknowledges them with their own comment. Goals have due dates and a status, absence is recorded by day, and documents such as warning letters sit with the person's record, with an audit log of every change.
This is a summary of the government's plans, not legal advice. Before dismissing anyone, speak to Acas or an employment lawyer.
Sources
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