Unfair dismissal law gives employees significant protections against being dismissed without a fair reason and fair procedure. This guide explains how the rules work, the qualifying period, compensation, and what employers must do to comply.
Planned qualifying-period change
The Employment Rights Act 2025 will reduce the unfair dismissal qualifying period to 6 months once section 25 is commenced:
- Qualifying period
- Currently 2 years; planned 6 months subject to commencement
- Fire and rehire
- New automatic-unfairness provisions not yet in force
- Tribunal time limit
- Currently 3 months less 1 day; planned 6 months subject to commencement
- Compensatory award
- Statutory cap currently applies; planned removal subject to commencement
How the qualifying period works
The key features of unfair dismissal protection:
What this means in practice
- Planned protection from 6 months: This will apply only after section 25 is commenced; the current ordinary qualifying period remains 2 years
- Day-one for some: Redundancy claims remain a day-one right
- Automatically unfair: No qualifying period for automatically unfair dismissals (unchanged)
- Initial period: A new 'initial period of employment' concept is planned for the first 6 months once the provision is commenced
Impact on probation
Employers should align probation periods with the qualifying period:
- You can operate a 6-month probation period
- Dismissal during probation must still follow fair procedures
- Prepare for employees to gain ordinary unfair dismissal protection after 6 months once the change is commenced
- Consider front-loading performance management to assess suitability quickly
Planned compensation change
The current statutory cap remains in place. Section 25 will remove it once commenced:
- Compensatory award
- Current statutory cap remains; removal not yet in force
- Already uncapped
- Health and safety dismissals, whistleblowing dismissals
- Basic award
- Remains calculated using the statutory week's pay cap
Fire and rehire restrictions
Planned extension of tribunal time limits
The current limit for most claims remains 3 months less 1 day. Section 152 will extend relevant limits to 6 months once commenced:
- Time limit
- Currently 3 months less 1 day; planned 6 months subject to commencement
- Early conciliation
- Extended to up to 12 weeks
- Total potential timeframe
- Up to 9-10 months from incident to claim
- Record retention
- Maintain dismissal records for at least 12 months
Employer compliance checklist
Dismissal procedures
- Review any planned restructuring or terms changes against the current ACAS Code and prepare for the new fire-and-rehire restrictions
- Familiarise with ACAS Code of Practice on Dismissal and Re-engagement
- Prepare document retention policies for the planned 6-month tribunal window
- Review harassment policies for third-party harassment liability
Performance management
- Review dismissal and performance management procedures
- Prepare probation policies for the planned reduction from the current 2-year qualifying period
- Train managers ahead of the planned 6-month qualifying period
- Consider the future impact if the compensatory-award cap is removed
- Review employment contracts and handbooks
Legal basis
Primary legislation and key regulations
Browse UK legislation (opens in a new tab) legislation.gov.uk