Unfair dismissals: Why 1st July is so important for employers

Cast a look over the Employment Rights Act, and when it comes to the biggest change – the expanded unfair dismissal rights for employees – you’d be forgiven for thinking you don’t have to do anything until 2027. But you’d be wrong.

You may be familiar with the current (soon to be old) rules on unfair dismissal: 

Employees need to have two years of continuous service for ordinary unfair dismissal protection. A tribunal may make a basic award plus a capped compensatory award, and you still have to establish a fair reason (conduct, capability/performance, redundancy, statutory illegality/ breach of law, SOSR – some other substantial reason) and follow a reasonable procedure. 

Remember, though, that if a dismissal is automatically unfair, for instance it is discriminatory, there is no qualifying period.

The big changes under the new rules are that the qualifying period for ordinary unfair dismissal is cut from two years to six months, and that the compensation element of any award becomes uncapped.

1st January 2027… minus six months

If you are following the maths you’ll realise why you need to make changes now. 

If the qualifying period is only six months from 1st January 2027, anyone employed on or after 1st July this year will enjoy its full protection. Indeed, anyone who started employment before this July but less than two years before 1st January 2027 will enjoy a shortening of their qualifying period.

To emphasise them, the five legal reasons for dismissing someone are not changing. They are:

• Conduct
• Capability, ill health or performance
• Statutory restriction
• Redundancy
• Some other substantial reason (SOSR)

What you need to do now

The new rules heap much more pressure on you to get recruitment right and react to any hiring errors on a tighter timescale.

Start with your paperwork – the employment contracts and company handbooks. What do they currently say about probation periods? With the two years that you had to play with, the chances are they could be relatively loosely worded or even contradictory to what the new rules will be.

Your new probation period needs to be succinctly wrapped up well within the six-month qualifying period, so you’ve completed a proper process of looking at new hires (this should be templated), and assessing if they are a long-term fit. If you do not feel they will make the cut, you need to act within six months, establishing a fair reason for dismissal – like capability or conduct – and following a fair process.

This brings us on to the second action we would advise doing now – ensuring your managers are well trained in performance management.

So you have protected yourself, somewhat, on paper; but you still need to ensure that in practice your managers have the capability and procedures to run a really good probation period and react to shortcomings.

This means training them to comprehend the HR processes linked to probation and dismissal, to identify underperformance as soon as possible, manage employees effectively – feed back constructively, on handling disciplinaries and grievances, escalating issues as appropriate and recording everything.

Here to help with every aspect of the Employment Rights Act

Your exposure to unfair dismissal claim risk is increasing significantly. In short, employees will be able to make a claim much sooner in the employment relationship, and if it is successful the awards may be higher. Moreover, the window of time in which they can make a claim is doubling in length from three to six months.

If it is not done already, we can help you audit your existing documents and update them for the new rules, tailored where possible to your business. We also have a range of training solutions, both in-person and eLearning, to sharpen up your managers’ skills when handling the probation period. Reach out to us today to get help.