Unfair Dismissal: Preparing For 2026 Changes

Big changes are coming to UK employment law — and if you’re running a small business, you’ll want to be ahead of them. By 2027, new legislation is expected to reshape the way unfair dismissal claims are handled, with the qualifying period for protection expected to reduce significantly from the current two years.

The message is clear: now is the time to prepare.

While the Employment Rights Bill is still progressing through stages of review, key changes are anticipated within the next 12–24 months — giving SMEs a valuable window to adjust policies, train line managers, and strengthen dismissal procedures before the legal bar is raised.

What’s Changing and When?

Under current legislation, employees must typically work for two continuous years before gaining the right to claim unfair dismissal (with some exceptions). That’s set to change. One of the most significant reforms expected under the proposed legislation is the reduction of the two‑year qualifying period for unfair dismissal claims to six months.

Other notable changes expected or under consultation by 2027 include:

Strengthened protections against dismissal in certain circumstances (e.g. whistleblowing, maternity).
Changes to flexible working: It’s anticipated that employers will need to consult meaningfully before rejecting a flexible working request.
New emphasis on procedural fairness during the early months of employment.

These reforms aim to create a fairer, more inclusive labour market — but they also bring added risk for SMEs that aren’t prepared.

What Does This Mean for SMEs?

For employers, especially small and medium-sized businesses, these reforms mean:

Increased legal exposure much earlier in employment.
Higher expectations on how dismissals are handled during probation and early employment.
More scrutiny around how flexible working requests are managed and declined.
Greater need for consistency in documentation, consultation, and record-keeping.

While these changes may feel daunting, they also present an opportunity to strengthen internal practices and promote a more positive, transparent working culture.

How to Prepare: Practical Steps for SMEs

If you’re looking to stay ahead of these upcoming legal changes, now is the time to review your internal processes and make sure your business is set up for success.

Review Your Dismissal Procedures

Many small businesses have, until now, leaned on the two-year service threshold as a safeguard. But with that protection likely disappearing, it’s crucial to revisit how you manage early dismissals.

Ask yourself: Are reasons for dismissal clearly documented? Are probation reviews structured and recorded? Do you have a consistent process for addressing poor performance or misconduct?

With unfair dismissal protection expected to apply after six months, early‑stage dismissals will need to be handled with much greater care than before.

Revisit Your Probation Periods

Probation periods still play a valuable role — just not as a legal shield. Instead, you’ll want to reframe them as structured development and feedback windows. This is your opportunity to assess suitability, support the new hire, and create a documented trail of communication.

Start by setting clear, measurable objectives from the outset of employment. Build in formal check-ins at regular milestones — typically at one, three, and six months. Give honest, constructive feedback and document any concerns promptly. If you do need to part ways, having taken reasonable steps to support the employee will be key to defending your decision.

Update Flexible Working Policies

Since 2024, flexible working has become a day-one right — and more changes are on the horizon. By 2027, employers may be required to carry out a formal consultation before rejecting a flexible working request, along with keeping a record of how the decision was made.

Now is the time to lay the groundwork. Train your managers to have open and constructive conversations about flexibility. Put a clear, consistent process in place for handling requests — and make sure it’s well-communicated. Standardised templates can help ensure consistency and reduce the risk of claims.

Train Line Managers

Many dismissal decisions sit with line managers — but not all of them have had the training to handle these situations fairly or lawfully. With stronger protections on the way, that’s a risk no business can afford.

Make it a priority to upskill your managers. They need to understand what unfair dismissal looks like, how to document conversations properly, and how to handle issues around performance or conduct confidently and compliantly. With the right training, they become your first line of protection — not a potential liability.

Strengthen Communication with Employees

Lastly, don’t underestimate the power of clear communication. Whether it’s managing a new hire’s performance or responding to a flexible working request, employees need to understand what’s expected of them, what the process involves, and what support is available.

Having an up-to-date employee handbook that reflects your current policies — and the direction of travel in employment law — is one of the best ways to embed fairness and clarity into your culture. When communication is open and proactive, misunderstandings are far less likely to arise.

Why Early Action Matters

Waiting until 2027 could put your business on the back foot — especially if reforms are phased in earlier or applied retroactively. The tribunal system is already under strain, and a rise in claims relating to shorter‑service employees is expected once these protections are implemented.

For SMEs, where resources are tight, a single claim can be disruptive — not just financially, but culturally too.

Being proactive gives you time to plan, test, and embed new practices across your business — with far less pressure.

How The HR Dept Can Help

At The HR Dept, we’re already helping clients prepare for what’s ahead. Our local, tailored support can help you:

Update dismissal and flexible working policies to reflect future legislation.
Train managers on early dismissal procedures, probation reviews, and handling difficult conversations.
Audit current processes to identify risks and gaps before they become costly problems.
Provide hands-on support with any dismissal or grievance issue that arises.

We take the stress out of staying compliant — so you can focus on running your business with confidence.

Don’t wait for the law to change before you act. Let’s prepare your business for the future of employment rights — fairly, confidently, and with expert support every step of the way.

Contact your local HR Dept today to find out how we can help.