Unfair dismissal after six months: the January 2027 change

From 1 January 2027, employees can bring an ordinary unfair dismissal claim after six months’ service instead of two years. The date is confirmed in law, not just in policy: the commencement regulations were made on 26 May 2026. The cap on compensatory awards is removed on the same day.

When does the change start?

The six month qualifying period applies where the effective date of termination is on or after 1 January 2027. This is set by regulation 3 of SI 2026/559, the Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026, signed by Kate Dearden at the Department for Business and Trade.

The government’s timeline update, last updated on 5 November 2026, lists the change under measures taking effect on 1 January 2027. Unlike fire and rehire, which moved to March 2027, this date has not changed.

What exactly changes in the law?

Section 25 of the Employment Rights Act 2025 makes three amendments to the Employment Rights Act 1996:

1. Section 108: “two years” becomes “six months” for the qualifying period.
2. Section 124: the limit on the compensatory award is removed.
3. Section 209(5): ministers lose the power to change the qualifying period by regulations.

Schedule 3 to the 2025 Act makes the related consequential amendments.

Which dismissals are caught?

The test is the effective date of termination, not the date you decide to dismiss or give notice. Regulation 4 says the new rules apply where an employee is dismissed before 1 January 2027 but the effective date of termination falls on or after it. They do not apply where the effective date of termination falls before 1 January 2027.

Watch notice periods. Under section 97 of the 1996 Act, if you give less than the statutory minimum notice, the effective date of termination is pushed back by that minimum notice for the qualifying period test. Paying in lieu of a short notice period does not avoid this.

Does it apply to existing staff?

Yes. The new period counts service already built up, so anyone with six months’ continuous employment at their effective date of termination is protected from 1 January 2027. In practice, staff who joined in or before early July 2026 will pass six months around the turn of the year.

What happens to compensation?

Unfair dismissal awards have two parts, and only one of them changes.

The figures come from the Employment Rights (Increase of Limits) Order 2026, in force from 6 April 2026. The compensatory award will still be what the tribunal considers just and equitable, so it will track actual losses. But senior, well paid staff could now recover far more.

What does not change?

Automatically unfair dismissals still need no qualifying service. Acas lists reasons such as pregnancy or maternity leave, trade union membership, whistleblowing and asserting a statutory right.

The tribunal time limit already changed on 1 October 2026, from 3 months to 6 months for most claims. Early conciliation through Acas is still required before most claims.

Which applies to you?

• If an employee has under six months’ service: they still cannot claim ordinary unfair dismissal, but automatic unfairness and discrimination claims remain open.
• If they have between six months and two years and leave on or after 1 January 2027: they gain full ordinary unfair dismissal rights for the first time.
• If they have over two years: the right is unchanged, but there is no cap on the compensatory award.
• If you are dismissing now with notice ending in January: treat the new rules as applying.

What employers should do now

1. List staff by start date. Flag anyone who will reach six months during 2027.
2. Shorten probation. Finish probation reviews well before six months, with a written outcome.
3. Run a fair process early. Performance, conduct and capability procedures matter from six months, not two years.
4. Check notice clauses. Short notice can push the effective date of termination into January.
5. Review insurance and budgets. Uncapped awards change the risk for higher earners. The true cost of an employee covers the wider budget.
6. Check settlement payments. See how termination payments are taxed.

The wider timetable, including fire and rehire rules from March 2027, is in our Employment Rights Act timeline.

Frequently asked questions

When does the six month unfair dismissal rule start?

It applies where the effective date of termination is on or after 1 January 2027. SI 2026/559 fixes the date in law.

Is the two year qualifying period still in force in December 2026?

Yes. Where the effective date of termination falls on or before 31 December 2026, the two year period still applies.

Will the compensation cap really be removed?

Yes. Section 25(3) of the Employment Rights Act 2025 omits section 124 of the 1996 Act from 1 January 2027, so the £123,543 and 52 weeks’ pay limits go.

Does the change apply to employees who started before January 2027?

Yes. Service already built up counts, so an employee with six months’ service at their effective date of termination is covered.

Is there a new statutory probation period?

No. The law does not create one. The government’s timeline does not mention one either, so probation stays a contractual matter.