Short-Service Dismissals: What's Changing in 2027?
HR Dept
From 2027, a significant shift in UK employment law will see employees gain protection from unfair dismissal much earlier in their employment, with the current two‑year qualifying period set to reduce to six months.
For SMEs that have previously relied on the two‑year qualifying period to manage short‑service dismissals more flexibly, this still represents a fundamental change.
Whether you’re a business owner handling HR yourself, or managing a growing team, understanding how this new framework affects you — and preparing ahead — will be essential. In this article, we’ll break down what’s changing, the introduction of the Initial Period of Employment (IPE), and what practical steps you can take to safeguard your business while remaining compliant.
What’s Changing?
Currently, employees only have the right to claim unfair dismissal after completing two years’ continuous service. This has given employers more leeway to terminate employment in the early stages without following the full dismissal process — provided there was no discrimination or breach of statutory rights.
However, from 2027, this two‑year threshold will be significantly reduced.
Unfair dismissal rights will instead apply after six months’ service, bringing forward legal protection for employees while still allowing employers a defined early employment period.
Short-Service Dismissals Will No Longer Be Low-Risk
One of the most notable impacts will be on how businesses handle short-service dismissals — those that typically happen during an employee’s first few months or year in the role.
What’s the risk? In short: the tribunal risk increases significantly.
Under the new rules, dismissals taking place after the first six months of employment will carry a much greater risk of unfair dismissal claims if not handled correctly.
This means that poor documentation, lack of process, or poorly handled exits will carry much greater legal and reputational risk than before.
The Role of the Initial Period of Employment (IPE)
To ease the pressure on employers, the government is introducing the Initial Period of Employment (IPE) as a sort of statutory probation period.
During this period (likely around 6 months), a “lighter-touch” dismissal process will apply for cases involving conduct or capability. However, it still requires:
- A formal meeting with the employee
- The right to be accompanied
- Some documentation or evidence to support your decision
It’s not a free pass — but it offers more flexibility than a full disciplinary process. Once the IPE and the six‑month qualifying period end, standard unfair dismissal protections apply in full.
What This Means for You as an Employer
This shift will require SMEs to rethink how they handle all dismissals — even in the early stages of employment. You’ll need clearer processes, more documentation, and better-trained managers to navigate the new legal framework.
Here’s how the risks and requirements are changing:
Area
Pre-2027
From 2027
Unfair Dismissal Rights
After 2 years
After six months
Short-Service Dismissal Risk
Low
High
Evidence Needed
Often minimal
Always required
Tribunal Risk
Low in first 2 years
Present after six months
Dismissal Procedure (during IPE)
Defined by contract
Statutory, lighter-touch process
How to Prepare: Practical Steps for SMEs
Preparation now will save time, money and stress later. Here’s how you can get ahead of the changes:
1. Audit Your Current Dismissal Policies
Start by reviewing your dismissal and disciplinary policies. Are they clear, up to date, and fair? Do they reflect the upcoming legal changes?
The HR Dept can help you conduct a full policy audit to ensure your processes are robust, compliant, and easy for managers to follow.
2. Enhance Performance Tracking from Early Employment
With early dismissal now under more scrutiny, you’ll need to evidence how you handled any concerns about conduct or capability.
Put in place simple systems that allow you to:
- Track new starter progress and performance
- Record any issues or conversations
- Show that you’ve given the employee a chance to improve
You don’t need complex software — even a structured spreadsheet and template review forms can work well.
3. Train Your Line Managers
Managers will be at the frontline of these changes. Equip them with the knowledge and tools they need to:
- Spot early signs of performance or conduct issues
- Handle concerns fairly and consistently
- Understand the correct procedure for dismissals during the IPE
At The HR Dept, we offer tailored training that’s practical, jargon-free and ideal for busy line managers.
4. Revisit Employment Contracts
Contracts should be updated to align with the new legal framework, including how the IPE will work in your business.
We can help redraft contracts that:
- Reflect statutory requirements
- Remove outdated probation clauses
- Set clear expectations from the start
This ensures consistency between policy and practice.
5. Communicate Clearly With Staff
Finally, let your team know about the upcoming changes. This builds trust and transparency — and helps employees understand how your business is evolving in line with the law.
Consider an internal update or team session to explain:
- How performance will be managed during the IPE
- What employees can expect in terms of support
- Your commitment to fair, lawful employment practices
Our Support: Helping You Prepare for 2027 and Beyond
Navigating new employment law can feel overwhelming — especially for smaller businesses without in-house HR teams. But you don’t have to face it alone.
The HR Dept’s Retained HR Services and consultancy support are designed to help SMEs like yours stay compliant, reduce risk and lead with confidence. Whether you need:
- A dismissal policy review
- Manager training on fair procedures
- Updated contracts and onboarding documents
- Hands-on support with tricky dismissals
2027 may feel like a long way off, but the sooner you prepare, the smoother the transition will be. Early planning gives you the time to train your team, update your documents, and build processes that protect both your employees and your business.
Need help preparing for earlier unfair dismissal rights? Get in touch with your local HR Dept advisor today to book a policy review or manager training session.
