Unfair dismissal changes: How employers should prepare

Eden Scott is a team of recruitment professionals. While the information provided here is accurate to the best of our knowledge, it is intended for general guidance only. To ensure compliance with current and upcoming legislation, employers can consult with an HR or employment law specialist.

Under the new Employment Rights Act, unfair dismissal protections are set to become a day-one right for employees. Starting on the first day of their employment, workers will be entitled to compensation should they be unfairly fired by an employer.

As an employer, here’s what you need to know.

What is unfair dismissal?

Unfair dismissal happens when an employee’s contract is terminated without being given a fair reason or without following the correct procedures. Previously, employees needed to be employed at a company for at least two years to claim unfair dismissal. 
 

What are the changes to unfair dismissal regulations?

The new law will get rid of the current two-year qualifying period. Employees will gain unfair dismissal protection from their first day on the job. That means employers will need a fair, lawful reason for dismissing an employee, regardless of their length of service. Additionally, the government is currently consulting on a maximum probationary period (currently anticipated to be nine months).
 

What happens if a former employee claims unfair dismissal?

If an employee believes they were unfairly dismissed, they have the right to bring a claim to an Employment Tribunal. The Tribunal will assess whether the employer had a valid reason for the dismissal and whether they conducted the process fairly. 

If the Tribunal finds the dismissal to be unfair, the employer may need to pay compensation to the former employee, or in some cases, may be required to reinstate their contract.
 

When will the changes come into effect?

The new laws are expected to come no sooner than autumn 2026.
 

What do the changes to unfair dismissal laws mean for employers?

Employers could face more scrutiny when handling dismissals. Without the cushion of the two-year period, any employee, including new hires, may bring an unfair dismissal claim if they have grounds to do so. Responding to an unfair dismissal claim can be time-consuming and costly. For that reason, employers should do all they can to avoid unfair dismissal claims by making sure they’re prepared. More on this below.
 

How employers can prepare for unfair dismissal changes 

With the introduction of day-one protections from unfair dismissal, employers should consider several strategies to ensure compliance and minimise the risk of tribunal claims. Here’s a step-by-step guide to prepare:
 

Introduce rigorous recruitment standards

As employment law specialist Helen Crossland explains, “carefully considered, fit for purpose recruitment policies and new starter programmes will be vital. [The new law] could make bad hiring decisions all the more costly and unforgiving.” (People Management)

For that reason, making sure you find the perfect fit for your new role is more important than ever.

Learn more: Hiring with Eden Scott
 

Review dismissal procedures and policies

Review your current dismissal and disciplinary procedures to make sure they follow the highest standards of fairness and transparency. As part of this, make updates to any employee handbooks or documentation so that your team can understand what to expect from performance management, misconduct reviews and disciplinary action.

Create comprehensive onboarding programmes

Help employees to get up to speed with confidence by creating well-planned onboarding programmes. Build in opportunities for regular feedback and adjustments, so that employees can see where they’re going right and in which areas they can improve.

Carefully monitor the probationary period

As the government is likely to introduce a maximum probationary period of nine months, it’s important to pay very close attention to an employee’s performance during this time. Create well-planned onboarding programmes to highlight any potential performance issues early on, and provide regular feedback and support. 

Document everything

Keep a detailed log of training, performance, feedback and other relevant interactions. If dismissing the employee becomes unavoidable, these records will be crucial in defending against potential unfair dismissal claims.

Seek legal advice 

For situations involving sensitive or complex dismissals, seeking early legal advice can help ensure compliance with the new legislation. An employment law specialist could help you navigate the fair dismissal process and handle any disputes that arise.

Create a positive workplace culture

By fostering open communication, offering regular feedback, and creating a supportive environment, employers can reduce the likelihood of conflicts that lead to dismissals. A positive work culture encourages employee retention and can lower the risk of dismissals happening in the first place.

Learn more: Building a positive workplace culture

 Further reading:
1 GUIDE: Unfair dismissal - How to protect your business
2 Preventing sexual harassment: Are you compliant with the new law?
3 Changes to flexible working: What employers should know
4 An end to 'fire and rehire': What employers need to know