The Employment Rights Act 2025 continues to be implemented in phases throughout 2026 and 2027. One of the most significant changes for employers will come into effect on 1 January 2027, when the rules surrounding unfair dismissal protection change substantially.
So, what will this mean?
These reforms will require employers to review their recruitment, probation, performance management and dismissal processes well in advance of the implementation date.
Key Changes
From October 2026
· The timeline for an employee to bring claims for compensation for a complaint will be extended from three months to six months in most cases. This means employers may need to retain employment records for longer and should expect a longer period during which claims can be made.
From January 2027
· The qualifying period for unfair dismissal protection will reduce from two years to six months, alongside the right to written reasons for dismissal.
· Protection against dismissal relating to spent convictions will apply from the first day of employment, with no qualifying period.
· Protection will continue for automatically unfair dismissal. New provisions will also make certain ‘fire and hire’ practises unfair in most cases.
· A fixed term contract will continue to count as a dismissal. Employers need to ensure that any non-renewal is fair and follows proper procedures once the six-month period is reached. Good practice, however, is to apply fair procedures regardless of an employee's length of service.
· The current cap on a compensatory award will be removed. Awards will continue to be made based upon actual and projected losses but there will no longer be a statutory maximum limit.
Although these changes do not take effect until January 2027, it is sensible to begin preparing now. Reviewing employment contracts is an important first step.
· For new appointments, you may wish to consider whether probationary periods and notice provisions remain appropriate. Shorter probation and notice periods during probation, with regular review meetings and timely decisions, may help ensure concerns are addressed before an employee reaches six months' service.
· The reduction in qualifying service to six months will be applied retrospectively. This means any employees with six or more months’ continuous service as of 1st January 2027 (so any contract dated 2nd January 2025 to 1st July 2026) will immediately gain unfair dismissal protection.
· ALL employees will be protected by this new legislation. Early-stage dismissals previously less scrutinised are expected to attract greater attention should a tribunal claim be made.
Final Thoughts
These reforms represent one of the biggest changes to unfair dismissal law in many years. While good employers are already likely to follow fair procedures, the reduction in qualifying service means those procedures will need to be applied much earlier in an employee's journey. Maintaining clear records, holding appropriate review meetings, documenting decision-making and seeking HR advice at an early stage will become increasingly important in reducing the risk of tribunal claims.
Need help navigating the changes? We hope to open our waiting list to churches needing HR support in the coming weeks, starting with inviting those on our waiting list. To join our waiting list, please head to https://www.churchworkers.net/