Story perspectives

UK Slashes Unfair Dismissal Qualifying Period, Removes Compensation Cap

6/4/2026

Summary

UK Cuts Dismissal

UK will cut qualifying period for unfair dismissal claims to six months on 1 January 2027 for employees hired by 1 July 2026.
The Employment Rights Act 2025 removes the £123,543 compensation cap, allowing tribunals to award loss of earnings.
From 1 January 2027, zero-hour and agency workers must get shift-change notice and compensation for cancelled or shortened shifts.
Employers are urged to tighten performance-management, keep records, and review insurance because uncapped compensation raises financial risk.

Summary

Howse Warns Firms

Matthew Howse warns that many UK firms may underestimate the operational impact of the Act’s expanded trade-union provisions.
He says employers must redesign engagement strategies and align cross-border projects with new UK regulatory expectations.
John van der Luit-Drummond says sectors from retail to technology are likely to see a surge in union organising.
He advises legal teams to monitor emerging employment issues such as shift-notice compliance and cross-jurisdictional bargaining rights.

History

Historical Context

The Employment Rights Act 1996 gave workers the right to claim unfair dismissal only after two years of service, a safeguard reflected in a labour market of about 5 million employees in 2021. The Trade Union Congress warns that the 2027 cut to a six-month qualifying period and removal of the compensation cap will trigger a surge in tribunal claims, forcing firms to revamp management.

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UK Cuts Dismissal

UK will cut qualifying period for unfair dismissal claims to six months on 1 January 2027 for employees hired by 1 July 2026.
The Employment Rights Act 2025 removes the £123,543 compensation cap, allowing tribunals to award loss of earnings.
From 1 January 2027, zero-hour and agency workers must get shift-change notice and compensation for cancelled or shortened shifts.
Employers are urged to tighten performance-management, keep records, and review insurance because uncapped compensation raises financial risk.

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