By Kathryn Rodgers, face2facehr
The Employment Rights Act 2025 is bringing the biggest changes to employment law in decades, and while many of the reforms won’t come into force until January 2027, some significant changes are already here – with more just around the corner.
From 1 July 2026, employees starting a new role only need six months’ service before they can bring an ordinary unfair dismissal claim, replacing the previous two-year qualifying period.
The changes don’t stop there. From October 2026, the time limit for bringing most employment tribunal claims will double from three months to six months, giving employees longer to pursue legal action. Then, from January 2027, compensation for unfair dismissal is expected to become uncapped, with awards based on an employee’s actual financial loss rather than being limited to a year’s salary.
For employers, this is much more than another employment law update. It’s a fundamental shift in how businesses need to think about managing people from day one.
A shorter qualifying period means greater risk
Previously, many employers viewed the first two years of employment as a relatively low-risk period. That doesn’t mean employees could be dismissed without reason, but the reduced risk of an unfair dismissal claim often led to less formal processes.
That’s no longer the case.
Employees recruited from July onwards will gain unfair dismissal rights after just six months, meaning businesses need to be confident they can justify any dismissal decision much earlier in the employment relationship.
The question employers should now be asking is:
If we had to defend this decision at an employment tribunal, could we?
If the answer isn’t a confident yes, it’s time to review your HR processes.
Good HR starts long before problems arise
The best way to reduce risk isn’t by waiting until something goes wrong. It’s by putting strong foundations in place from the very beginning.
That includes having clear employment contracts, well-structured probationary periods, regular one-to-one meetings, documented performance conversations and managers who understand how to deal with issues fairly and consistently.
Many businesses already do these things well. Others may find they’ve relied on informal conversations or verbal warnings that leave little evidence if a decision is later challenged.
Good documentation isn’t about creating unnecessary paperwork. It’s about protecting both your business and your employees by ensuring decisions are fair, transparent and consistent.
The next six months are an opportunity
Although the new qualifying period is now in force, employers still have a valuable window to prepare before the remaining Employment Rights Act changes arrive in January 2027.
Now is the ideal time to review contracts, policies and procedures, ensure probation processes are fit for purpose and provide managers with the training they need to confidently handle difficult conversations.
After all, even the best HR policies won’t protect a business if they’re not applied consistently.
Prevention is always better than cure
Employment tribunal cases continue to take longer to reach a hearing, with growing backlogs creating months, and sometimes years, of uncertainty for employers and employees alike.
Alongside legal costs and management time, future unfair dismissal awards could become significantly more expensive once compensation becomes uncapped. That makes following a fair process and keeping clear records more important than ever.
The reality is that most tribunal claims don’t arise because employers intentionally do the wrong thing. They happen because businesses haven’t followed a fair process or kept the evidence needed to support their decisions.
Looking ahead
The Employment Rights Act represents a significant change in how employers manage their people, but it doesn’t need to be something to fear.
Businesses that take proactive steps now will be in a much stronger position as further reforms come into effect.
Review your contracts. Refresh your policies. Train your managers. Most importantly, make sure your people processes are robust enough to stand up to scrutiny.
The legal landscape is changing, but good HR has always been about treating people fairly, communicating clearly and making well-informed decisions.
The key question every employer should be asking themselves over the next six months is this:
Are our processes robust enough to protect us against an uncapped compensation claim?
Getting the right processes in place today could save your business significant time, cost and stress tomorrow.
face2facehr.com