UK employment law changes to reduce dismissal qualifying period and remove award caps

The United Kingdom is implementing significant changes to employment law regarding unfair dismissal and tribunal claim timelines.

Starting 1 January 2027, the qualifying period for ordinary unfair dismissal will drop from two years to six months. Additionally, the statutory cap on compensatory awards will be abolished, meaning awards will be limited only by an employee’s actual and projected financial losses rather than a fixed ceiling. The protection against unfair dismissal relating to spent convictions will also be removed.

In a separate procedural shift, the timeframe for most Employment Tribunal claims, including discrimination and unfair dismissal, will extend from three months to six months effective 1 October 2026. For breach of employment contract claims, this six-month period will begin on 9 November 2026. These extensions follow a previous increase in the ACAS early conciliation period, which can now last up to 12 weeks.

Legal experts suggest these changes may improve access to justice but also necessitate that employers update handbooks and seek early advice to manage potential claims, particularly following a reported 39% increase in tribunal claims.