Unfair Dismissal Rights: The Overlooked 1st July 2026 Risk Point

Significant changes to unfair dismissal rights are approaching, and employers should not assume that the key date is only 1 January 2027. Although the new regime formally applies to dismissals from that date, the practical risk starts earlier. Employees hired on or before 1 July 2026 will have six months continuous service by 1 January 2027 and would therefore fall within the new unfair dismissal regime as soon as it takes effect.

Unfair Dismissal: From Two Years to Six Months

At present, employees usually need two years’ continuous service before they can bring an ordinary unfair dismissal claim. Under the Employment Rights Act 2025, that qualifying period will reduce to six months for dismissals from 1 January 2027.

This represents a significant shift in employment risk. Employers will have much less time to assess new employees before ordinary unfair dismissal protection applies. Short-service dismissals, which have historically carried lower risk, will therefore require more careful handling once the six-month threshold is reached.

The Government has also confirmed that the statutory cap on compensatory awards for unfair dismissal will be removed at the same time. This means that, in higher-value cases, the potential financial exposure for employers will increase significantly.

The 1st July 2026 Risk Point

Although the new unfair dismissal regime formally applies from 1 January 2027, employees recruited on or before 1 July 2026 will already have six months continuous service by the time it begins. However, new research conducted by WorkNest has found that awareness of the new timetable remains uneven, with 29% of employers either misunderstanding when protection will apply or remaining unsure.

Employers who wait until 1 January 2027 to update probation, performance management and dismissal procedures will therefore already be too late. The key issue will not simply be when an employee was recruited, but whether they have six months continuous service and an effective date of termination on or after 1 January 2027.

This makes start dates, notice periods and dismissal dates particularly important. Employers will need to ensure that managers understand the new timing rules and do not assume that employees hired in 2026 remain low-risk simply because they were recruited before the new law formally takes effect.

Probation Periods Under Scrutiny

Probation periods will become more important, but they should not be treated as a legal shield. A probation clause is a contractual management tool; it does not override statutory employment rights.

Employers should ensure that probation reviews are timely, documented and actively managed. If performance, conduct or suitability concerns arise, they should be addressed early rather than allowed to drift. Once an employee has six months continuous service, dismissal will generally need to be supported by a fair reason, proper evidence and a fair process.

Employers should also remember that some claims do not require two years continuous service now and will not require six months continuous service in future. Claims involving discrimination, whistleblowing or certain automatically unfair reasons can already arise from day one.

Confidence Gaps Among Employers

The WorkNest survey also identified a confidence gap around probation dismissals. Just 19% of employers said they would feel very confident dismissing an employee at the end of a six-month probation period, while 57% described themselves as only "somewhat confident". A further 11% said they were not confident, and 13% indicated that they would require HR advice before proceeding.

This creates a practical risk. If managers postpone difficult conversations, fail to record performance concerns, or allow probation periods to pass without proper review, employers may face avoidable unfair dismissal exposure once the new rules take effect.

Wider Litigation Risk

The reduction in the qualifying period re unfair dismissal claims is not happening in isolation. Employment tribunal time limits are also expected to increase from three months to six months, no earlier than October 2026.

Taken together, these changes are likely to increase the number of employees able to bring claims and lengthen the period during which claims may be issued. That makes record-keeping, early performance management and consistent decision-making more important.

Practical Steps for Employers

Employers should use the period before 1 July 2026 to tighten the way early-stage employment is managed.

This should start by auditing probation and dismissal arrangements well before 1 July 2026. That includes checking whether probation periods are clearly drafted and whether they can be extended where necessary. Moreover, once statutory notice is factored in, a person dismissed shortly before the six-month point may still end up with the required six months’ continuous service once that notice is added on. Probationary periods should therefore be set at a level that leaves a sufficient window to effect a safe dismissal before unfair dismissal protection is engaged. Hence, six-month probationary periods are now too long, as they do not leave a sufficient window.

Start dates and service milestones should be actively monitored so that managers know when an employee is approaching six months continuous service. Performance or conduct concerns should be addressed early, with probation reviews, warnings, support measures and outcomes properly documented.

Line managers will also need training on the new timetable and on the importance of acting promptly. Dismissals should be based on evidence, a clear reason and a fair process, particularly where an employee is nearing the six-month threshold.

Recruitment processes should also be strengthened. With less time to assess suitability before unfair dismissal protection applies, clear job descriptions, structured interviews, reference checks and early performance expectations will become even more important.

Conclusion

The reduction of the unfair dismissal qualifying period is not simply a 1 January 2027 issue. For employers, the risk starts earlier because employees recruited on or before 1 July 2026 will have six months continuous service by the time the new regime begins.

That makes the coming months important. Probation periods will need to be actively managed, concerns addressed promptly, and dismissal decisions supported by proper evidence and process. Employers should also ensure that managers understand the significance of start dates, notice periods and the effective date of termination.

The practical message is clear: waiting until 1 January 2027 will be too late. Employers that prepare before the six-month window opens will be better placed to manage probation, performance and dismissal risk under the new regime.