In our previous article, we set out the changes to unfair dismissal which are set to come into force under the Employment Rights Act 2025 (ERA 2025).

This article sets out the further detail you need to know, including when the changes take effect, how the transitional rules operate, and what the rules mean in practice for employees dismissed close to the 1 January 2027 commencement date.

Headline changes to unfair dismissal protections under the ERA 2025

• Qualifying period: The qualifying period of employment for bringing an ordinary unfair dismissal claim is reduced to six months.
• Removal of cap on the compensatory award: Both the financial cap and cap of 52 weeks' gross pay will be removed.
• Power to vary the unfair dismissal qualifying period: The power to vary the qualifying period by regulations has been removed, meaning it can’t be easily changed by future governments.

When will the changes happen?

On 26 May 2026 the government made the Employment Rights Act 2025 (Commencement No4 and Transitional and Saving Provisions) Regulations (SI 2026/559) which will bring the above changes into force on 1 January 2027.

The reduction of the qualifying period to six months and the removal of the cap will apply to any claims where the effective date of termination (EDT) is on or after 1 January 2027.

Reduction of qualifying period 

In respect of qualifying service to bring a claim, this means that if an employee is dismissed before 1 January 2027 but was not given statutory notice, they will still be able to bring a claim (even if a payment in lieu of notice was made). This is because under section 97(2) of the Employment Rights Act 1996, statutory notice must be added to the date of dismissal and included within the period of qualifying service to extend the EDT.

Removal of the cap 

The statutory extension of the EDT does not apply to the calculation of the compensatory award. Therefore, employees will only be entitled to uncapped damages in cases where the actual EDT is on or after 1 January 2027 (this is in line with the current practice where the actual EDT dictates what level of cap applies, as it rises each year).  

For more on how the changes to unfair dismissal will affect your organisation and what employers can do to prepare, please listen to our podcast.  You can also find further resources on all things ERA 2025 on our ERA 2025 hub. 

If you would like to discuss how our team of experienced employment lawyers can support your organisation, please get in touch.