Are Employers Ready for the New Unfair Dismissal Rules?

Statistics show that only 7% of employers are aware of the new unfair dismissal reforms.

A new research report titled “Unfair Dismissal: The six-month Rule, by HR software company HR Locker, has found that 93% of employers that it surveyed were not aware of the new unfair dismissal laws.

The research surveyed 1,500 HR decision makers and business owners at firms employing 10 to 500 people in a variety of sectors, as well as 500 employees of those firms. The research was undertaken by HR Locker between 3 and 14 August 2026.

It is also a fact that four in five employers in the past three years have dismissed an employee who has between six months and 24 months continuous service. Until now the two-year unfair dismissal rule kept those exits out of employment Tribunal reach (apart from automatic unfair dismissal claims which attract day one rights)

What is changing?

It is estimated that six million employees will gain ordinary unfair dismissal rights and protections when a triple whammy of changes lands. Already this month (from 1 October 2026), the time limit to claim ordinary unfair dismissal doubles from three months to six months.

From 1 January 2027, the qualifying period to claim ordinary unfair dismissal reduces from two years to six months. In addition, there will be no compensation cap (currently £123,543), which is being removed.

The survey and its findings.

It is shocking that so few employers who were surveyed are aware of these significant changes and the impact that they are going to have on their businesses if they get it wrong and do not implement fair processes and procedures in dismissing staff.

The fact is that the changes have already begun in the sense that all employees recruited after 1 July 2026 will have ordinary unfair dismissal rights by 1 January 2027.

The employees affected are already on the payroll, and again only 12% of employers are aware that their new members of staff will have ordinary unfair dismissal protection within six months of their start date.

The main findings of the survey were: 

• 61% of employers planning early dismissals have no dedicated record system, which indicates that many intend to accelerate decisions without the crucial evidence that will be required to defend them.
• 57% of employees say that they would challenge a dismissal is they felt that it was unfair, which indicates an uptick in the number of employment tribunal claims that we can expect to experience as a result of these changes.
• 65% of employers believe that they can produce complete records for a nine-month dismissal, revealing that confidence is high but is misplaced.
• Of the 18% of employers who have already faced an employment tribunal claim, three in ten spent £25,000 or more defending a single claim under the existing capped compensation regime.
• 54% of employees say that detailed records would deter challenges, which is a strong indication that documentation and detailed records would act as a deterrent against employee challenges.

Consequences

This survey is just a small snapshot but represents a good indicator of the lack of awareness facing employers, and especially SME’s who perhaps do not have the benefit of in-house HR resources, or access to legal advice.

Employers should use the period between now and the new year to implement or update their policies and procedures, especially their probationary periods and disciplinary procedures, and to train managers who have decision-making powers.

It is also important and even vital that employers keep records and documentary evidence relating to any workplace issues affecting performance and misconduct and to follow fair ACAS-approved procedures before arriving at any decision to dismiss employees.

We recommend seeking timely legal advice as soon as possible and when a workplace issue first starts to surface.

The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek a solicitor’s advice from Gilson Gray.