Contents
Status at 28 October 2026: made law, takes effect on 1 January 2027
Section 25 of the Employment Rights Act 2025 is law, and regulation 3 of S.I. 2026/559 (made 26 May 2026) brings it into force on 1 January 2027. It is not in force yet: until then the qualifying period is still two years and the compensation cap still applies. It extends to England, Scotland and Wales. Check before relying on this guide after the date above.
The short version
- Six months, not two years. To claim ordinary unfair dismissal an employee must have been continuously employed for not less than the qualifying period ending with the effective date of termination (the day the job ends). Section 25 changes that period in section 108(1) of the Employment Rights Act 1996 from two years to six months.
- It depends on when the job ends. The new rule applies where the effective date of termination is on or after 1 January 2027, even if notice was given before that date. It does not apply where the job ends before 1 January 2027.
- No cap on the compensatory award. Section 25 also repeals section 124, which limits the compensatory award. For a job that ends before 1 January 2027 the limit is still the lower of £123,543 and 52 weeks’ pay, even if the claim is decided later.
- A fair reason and a fair process are still what matter. The date a person qualifies does not change that. Discrimination, whistleblowing, pregnancy and several other claims need no minimum service at all.
- Probation does not change the date. Only continuous employment counts, not whether someone has passed probation.
This guide is general information, not legal advice. It covers Great Britain, not Northern Ireland, and only the qualifying period and what follows from it.
What changes on 1 January 2027
| Topic | Job ends before 1 January 2027 | Job ends on or after 1 January 2027 |
|---|---|---|
| Service needed to claim ordinary unfair dismissal | Two years (Employment Rights Act 1996, section 108(1)) | Six months (section 25 of the 2025 Act) |
| Limit on the compensatory award | Lower of £123,543 and 52 weeks’ pay (section 124) | None: section 124 is repealed |
| Service needed to ask for a written statement of the reasons for dismissal | Two years (section 92(3)) | Six months (Schedule 3, paragraph 1(2)) |
The transitional rule is in regulation 4 of S.I. 2026/559. The new rules have effect where an employee is dismissed before 1 January 2027 but the effective date of termination falls on or after that date. They do not have effect where the effective date of termination falls before 1 January 2027. So a person given notice in December 2026 whose notice expires in January 2027 is covered by the new rule, and a person whose employment ends on 31 December 2026 is not.
One point is not settled by the regulations. If you dismiss without notice, or on less than a week’s notice, in the last days of December, the statutory-minimum rule in section 97(2) may move the date of termination into 2027 for the service test, and regulation 4 does not say whether that moved date counts for the transitional rule. The safe approach is to assume it does. Take advice before relying on the date.
The 2025 Act is the law now. Acas, on its pages about the change, describes it as not yet law until it comes into force, which is the same point: nothing in this table applies to a job that ends before 1 January 2027.
How the six months are counted
- The period of continuous employment begins with the day the employee starts work (section 211), and it must end with the effective date of termination.
- The effective date of termination is the day notice expires, or the day the termination takes effect if there was no notice (section 97(1)).
- You cannot shorten it by dismissing without notice. If the employer terminates and the notice the law requires (section 86) would have ended later, then for the qualifying-period test the later date counts (section 97(2)). For an employee with at least a month’s service and under two years, that statutory minimum is one week.
- The Act says a month is a calendar month and the start day counts (sections 210(2) and 211(1)(a)). On that basis the Court of Session held in Pacitti Jones v O’Brien [2005] CSIH 56 that a year starting on 8 April ended on 7 April, so the safe planning approach is to treat the six months as complete at the end of the day before the six-month date. That is a Scottish appeal decision, so it is persuasive rather than binding in England and Wales. Where a decision turns on one day, get advice.
Our companion guide on probation and the dates has worked examples.
What does not change
- No service needed for some claims. Section 108(3) lists dismissals that are unfair whatever the person’s service, including reasons connected with pregnancy and family leave, health and safety, whistleblowing and asserting a statutory right. Acas gives examples on its unfair dismissal page.
- Discrimination. The Equality Act 2010 stops an employer discriminating against an employee by dismissing them (section 39(2)(c)), with no minimum service.
- You still need a fair reason. It must be one of capability or qualifications, conduct, redundancy, a legal bar on continuing, or some other substantial reason, and you must act reasonably in treating it as enough, taking into account the size and administrative resources of your business (section 98).
- Contract rights. Notice pay and other breach of contract claims are separate from unfair dismissal.
What it can cost you
- Compensation. The compensatory award is what the tribunal considers just and equitable having regard to the loss caused by the dismissal (section 123), and the employee must try to reduce their loss. For a dismissal with an effective date of termination on or after 1 January 2027 the section 124 cap no longer limits it.
- Basic award. It counts completed years of employment (section 119), so for ordinary unfair dismissal of someone with under a year’s service it is nil. Some automatically unfair dismissals carry a minimum basic award (section 120).
- Acas Code uplift. If a tribunal finds you unreasonably failed to follow the Acas Code of Practice on disciplinary and grievance procedures in a matter it covers, it may increase an award by up to 25% (Trade Union and Labour Relations (Consolidation) Act 1992, section 207A).
- Time limit. For a dismissal taking effect on or after 1 October 2026, a claim must reach the tribunal within six months beginning with the effective date of termination (section 111(2), S.I. 2026/954). Some pages still say three months. The time limit is paused while you and the employee use Acas early conciliation (section 207B), so a claim can arrive later.
Scotland and Wales
Employment law is reserved to the UK Parliament. The Employment Rights Act 1996 and the Employment Tribunals Act 1996 are listed as reserved matters in Schedule 5 to the Scotland Act 1998, and section 25 extends to England, Scotland and Wales. So the six-month period, the removal of the cap and the timing rules are the same in Scotland as in England and Wales, and employment tribunals in Scotland apply them. This guide does not cover Northern Ireland, which has its own legislation.
A plan for a small employer
- List everyone with their start date. Use the date continuous employment began, which can be earlier than the latest contract, for example where someone worked for you before or came to you in a business transfer. Mark who already has two years, and who will have six months by 1 January 2027.
- Check your probation terms. If you have a probation period, the written statement of employment particulars must state it and its conditions (section 1). Look at which probations end after the date a person is covered.
- Plan review dates early. Hold reviews on the evidence, and write things down. Do not rely on a single review at the very end.
- Check your process. Have a written disciplinary and capability procedure in line with the Acas Code, a decision-maker with authority, an appeal, and letters that give the reasons.
- Check the reason. Make sure you are not dismissing for a reason that needs no qualifying service.
- Keep records. Dated notes of reviews, concerns and support, kept securely.
Frequently asked questions
Does this apply to someone who started last month?
It is not in force yet: it applies to dismissals that take effect on or after 1 January 2027. A person who started last month will reach six months in March 2027, on the cautious count (a person who starts on 1 November 2026 reaches it on 30 April 2027).
Can I dismiss before 1 January 2027 to avoid it?
The law applies by the effective date of termination, so the date matters for the service test. But you still need a genuine reason and, for a fair dismissal, a fair process, and claims that need no service, such as discrimination, are unaffected. Do not pick a date and then look for a reason. Acas says that ending probation before protection starts “does not avoid legal risks”, and a discriminatory, whistleblowing or pregnancy-related dismissal is unlawful whatever the date. If the date is close to 1 January, take advice.
Is a probation period still worth having?
Yes, as a structured way to check someone is right for the job, if the reviews are real. It does not change when they can claim.
What about workers and the self-employed?
Only employees can claim ordinary unfair dismissal. Employment status is decided by the facts, not the label. Get advice if you are unsure.
Where is the official guidance?
Acas has pages on the Employment Rights Act 2025 changes, on unfair dismissal and on following a fair procedure. They are the best free reference. An updated Acas Code is expected.
Sources
Last checked 28 October 2026.
- Employment Rights Act 2025, section 25 and Schedule 3, legislation.gov.uk
- The Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026 (S.I. 2026/559), legislation.gov.uk (regulation 3: 1 January 2027; regulation 4: transitional rule)
- Employment Rights Act 1996: section 1, section 86, section 92, section 97, section 98, section 108, section 111, section 119, section 120, section 123, section 124 and section 210 and section 211, legislation.gov.uk
- [Pacitti Jones v O’Brien [2005] CSIH 56](https://www.scotcourts.gov.uk/media/j0ym05jv/2005csih56-pacitti-jones-vclaire-obrien.pdf), Court of Session (how a period of months or years ends)
- Equality Act 2010, section 39 and Trade Union and Labour Relations (Consolidation) Act 1992, section 207A, legislation.gov.uk
- The Employment Rights Act 2025 (Commencement No. 5 and Transitional Provisions) (Amendment) Regulations 2026 (S.I. 2026/954), legislation.gov.uk (six-month tribunal limit from 1 October 2026)
- Scotland Act 1998, Schedule 5, legislation.gov.uk (employment reserved, Part II Head H)
- Employment Rights Act 2025: what is changing and when, Unfair dismissal Following a fair procedure and Probation periods, Acas
Changes to this guide
- 28 October 2026: Published as a draft for review.
This guide is general information written from the official sources listed above and checked on 28 October 2026. It is not legal, tax or financial advice, and Plainfiles is not endorsed by any government body. Rules change, so check the linked official pages for your own situation. Written and designed by Plainfiles with the help of artificial intelligence (AI) tools, then checked against the official legislation and guidance listed in the sources. How we write and check our guides.