The New Unfair Dismissal Landscape: Employment Law Changes 2026 and 2027

1. Review Your Probation Arrangements

As unfair dismissal rights become available earlier, employers will need effective processes for identifying and addressing concerns sooner. 

Questions to consider include: 

• Are probation reviews carried out consistently? 

• Are managers documenting concerns? 

• Are probation extensions handled properly? 

• Are employees receiving clear feedback?  

A probation process should not simply record outcomes. It should actively manage risk. 

A probation period dismissal does not require the same rigour as a disciplinary procedure or a capability procedure required for an employee who has the right to bring an unfair dismissal claim. However, the same principles apply. Reviewing these procedures now also makes a lot of sense. It should help you to ensure consistency in the management of capability, conduct and related issues throughout your organisation and help you to reduce the risk of significant unfair dismissal compensation. 

2. Review Your Disciplinary Procedures 

Employers should ensure that their policies: 

• Are understood by managers. 

• Are properly documented. 

• Include appropriate investigation stages. 

• Provide for careful evidence gathering and assessment. 

• Ensure that the employee knows the case against them and has sight of the evidence in good time before the disciplinary meeting. 

• Ensure that disciplinary meetings are properly minuted. 

• Provide clear appeal rights. 

Having a procedure is not enough. It must be capable of standing up to challenge. Having a disciplinary procedure checklist for employers that helps managers follow the procedure is important, as is more general manager training in employment law. 

3. Review Capability Processes 

Performance management remains one of the most common areas of dispute. 

Employers should ensure that managers have clear guidance on: 

• Setting objectives. 

• Identifying concerns. 

• Providing support. 

• Conducting review meetings. 

• Recording outcomes. 

Strong capability processes can sometimes prevent problems becoming dismissal cases in the first place. 

4. Improve Investigation Standards 

Good investigations sit at the heart of good decision-making. 

Employers should consider whether managers have access to: 

• Investigation templates. 

• Witness statement templates. 

• Investigation checklists. 

• Guidance on evidence gathering. 

• Report-writing tools. 

Good evidence helps organisations make better decisions and defend those decisions when challenged. 

5. Understand Your Financial Exposure 

Many organisations underestimate the potential cost of defending workplace claims. 

Understanding potential liability can help employers: 

• Assess risk. 

• Make informed decisions. 

• Budget appropriately. 

• Evaluate settlement options. 

Risk can be easier to manage when it has been quantified. 

How Prepared Is Your Business for the 2026 Employment Law Changes? 

The forthcoming reforms represent one of the most significant changes to unfair dismissal law in a generation. 

Employers that review their procedures, train their managers and strengthen their decision-making processes now are likely to be in a much stronger position when the changes take effect. 

Employment Law Changes 2026: frequently asked questions 

Can managers create liability for the business? 

Potentially, yes. Even where policies are well drafted, managers who fail to follow those policies consistently can expose the organisation to risk. Manager training and practical guidance are therefore becoming increasingly important. 

How can employers prepare for the Employment Rights Act 2025? 

Employers should consider: 

• Reviewing probation procedures. 

• Reviewing disciplinary procedures. 

• Reviewing capability and performance management processes. 

• Improving investigation standards. 

• Assessing potential financial exposure. 

• Training managers on fair decision-making. 

Taking proactive steps now may significantly reduce future risk. 

When do the unfair dismissal changes take effect? 

The increase in the time limit to 6 months for starting a claim is effective from 1 October 2026. The reduction in the qualifying period to 6 months, and the removal of the compensation cap, both take effect on 1 January 2027. 

How much could an unfair dismissal claim cost? 

The answer depends on a range of factors including salary, benefits, length of service, loss of future income and other factors. The key point is that the potential financial exposure will increase significantly following the unfair dismissal compensation cap removal, making early risk assessment increasingly important. 

Next reads 

• Fair reasons for dismissal in the new employment landscape

• Unfair Dismissal and the Employment Rights Act 2025: What Employers Need to Know

Our Employment team advises businesses, directors and contractors across London and beyond on employment law, risk management and the practical implications of legislative change. To discuss a review of your organisation's current position, call 020 8858 6971 or email employmentenquiries@grantsaw.co.uk.

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Disclaimer 

This article is for general information only and is not legal advice. Laws and guidance change and outcomes depend on facts. If you need advice on your situation, please contact us. Grant Saw Solicitors LLP is authorised and regulated by the Solicitors Regulation Authority. 

Last updated: 21 September 2026