2 Year Unfair Dismissal timescales reducing to 6 Months

At the moment, employees usually need two years’ service to bring an ordinary unfair dismissal claim.

From 1 January 2027, employees will be able to bring ordinary unfair dismissal claims after six months’ service.

This is a major change for employers.

For SME employers, this means many more employees will have unfair dismissal protection much earlier in their employment.

It does not mean employers cannot dismiss employees. However, it does mean employers will need to be more careful about probation periods, short-service dismissals, performance concerns and conduct issues.

What is changing?

From 1 January 2027, the qualifying period for ordinary unfair dismissal will reduce from two years to six months.

This means that once an employee has six months’ service, they will usually be able to bring an ordinary unfair dismissal claim if they believe they have been dismissed unfairly.

Employers will need to show that there was a fair reason for dismissal and that a fair process was followed.

This could include dismissals connected to:

• conduct;
• capability or performance;
• redundancy;
• statutory restriction;
• some other substantial reason.

The employer will also need to show that the decision to dismiss was reasonable in the circumstances.

Short service has never meant no risk

Some employers currently see employees with less than two years’ service as low risk.

This has always been a dangerous assumption.

Employees can already bring some claims from day one of employment. These include claims linked to discrimination, whistleblowing, pregnancy, health and safety, unlawful deduction from wages and certain automatic unfair dismissal rights.

The January 2027 change increases the risk further because ordinary unfair dismissal protection will apply much earlier.

This means employers should start putting in place systems now ready for the January 2027 changes.

Probation periods need to be actively managed

Probation periods will become even more important.

Many employers include probation clauses in contracts, but then do not properly manage the probation period.

A probation period should not simply be allowed to pass without review.

A well-managed probation period can help employers identify concerns early and make better decisions.

Should employers review probation clauses?

Yes.

Employers should review their contracts before January 2027.

Some businesses currently use six-month probation periods. However, once unfair dismissal rights apply after six months, employers may want to consider whether a shorter probation period would be more practical.

For example, a three-month probation period with the option to extend by a further three months may give the employer more flexibility, provided the contract is clearly worded and the process is managed properly.

There is no single approach that works for every business. The right probation period will depend on the role, the level of responsibility and how long it reasonably takes to assess suitability.

However, employers should not wait until January 2027 to review this.

Performance concerns need to be dealt with early

A common issue for employers is allowing performance concerns to go un addressed.

Managers may feel uncomfortable raising concerns, or they may hope the employee improves without formal action.

This can create problems.

If concerns are not raised early, the employee may argue that they did not know there was a problem. They may also argue that they were not given a reasonable opportunity to improve.

Employers should make sure performance concerns are addressed promptly and clearly.

The key is to create a clear record showing that the employer acted fairly and gave the employee a chance to respond.

Conduct issues still need a fair process

Where an employee is accused of misconduct, employers should avoid making rushed decisions.

Even where the employee has short service, the employer should still consider the basic principles of fairness.

The process does not need to be overly complicated, but it does need to be reasonable.

A rushed dismissal with poor evidence can create risk, especially once the employee has six months’ service.

Redundancy processes will also matter

The change will also affect redundancy situations.

Employees with six months’ service will be able to challenge whether a redundancy dismissal was fair.

Employers will need to show there was a genuine redundancy situation and that a fair process was followed.

This may include consultation, fair selection, consideration of alternatives and proper communication.

For SMEs, this means redundancy decisions should be planned carefully and documented properly.

What should employers do before January 2027?

Employers should use 2026 to prepare.

This should include reviewing:

• employment contracts;
• probation clauses;
• probation review forms;
• disciplinary procedures;
• performance management processes;
• dismissal procedures;
• redundancy procedures;
• appeal processes;
• manager guidance;
• template letters and meeting scripts.

Employers should also train managers on how to deal with concerns early and when to seek HR advice.

The aim is not to make every employment issue formal. The aim is to make sure managers deal with concerns fairly, consistently and with proper records.

Good HR support can make the difference between a controlled process and a costly dispute.

Final thoughts

The reduction in the unfair dismissal qualifying period from two years to six months is a significant change.

Employers should not wait until January 2027 to prepare.

Probation periods, performance management, disciplinary processes and dismissal procedures should all be reviewed now.

For SME employers, the message is simple: deal with concerns early, follow a fair process and keep clear records.

If your contracts, handbooks or HR procedures have not been reviewed recently, KeyHR can help you prepare for the January 2027 changes and reduce the risk of future tribunal claims.