Getting your timings right for expanded unfair dismissal protections – time to plan ahead
It won’t have escaped your attention that, from 1 January 2027, employees will only need six months’ continuous service to be eligible to bring an “ordinary” unfair dismissal claim; down from the current two years. This means that anyone who joined your organisation as recently as 1 July 2026 will gain the protection come New Year’s Day 2027.
Indeed, the same will apply to anyone who joined from 2 January 2025; they too will have the requisite service come New Years Day 2027.
Most employers also know that this means that they should be actively managing poor performance or conduct amongst this cohort of employees before the end of this year. However, employers are sometimes unsure on exact deadlines and the effect of probationary and notice periods.
Where dismissal is considered necessary, the safest option is to ensure that the individual’s actual last day of employment is before Christmas 2026 at the latest, including ensuring that the decision is clearly communicated to, and received by, the employee on or before that date too.
Why before Christmas?
The reduced service requirement to bring an “ordinary” unfair dismissal claim will apply to anyone whose last day of employment is on or after 1 January 2027.
However, an individual’s last day of employment (referred to as their “effective date of termination”, or “EDT” for short) is sometimes deemed to be later than their actual last day. This is because of statutory rules on minimum notice periods. For employees with between one month and two years’ service, the statutory minimum notice entitlement is one week. Therefore, the EDT for such employees will be extended as follows:
- If you dismiss without notice, the EDT is the actual last day of employment plus one week.
- If you dismiss with notice, the EDT will be the actual last day of employment or, if later, the date one week after giving notice.
In cases of summary dismissal for gross misconduct, the EDT is not extended. However, the employee could dispute whether they had committed gross misconduct, meaning the employer could still be put to the time and costs of litigation.
Worked examples
- If an employee joined your organisation on 1 July 2026 and you dismissed without notice on 29 December 2026, their deemed EDT would be 5 January 2027. The new rules would apply to them and they would have the necessary six months’ service to claim unfair dismissal.
- Conversely, if you dismissed without notice on Christmas Eve 2026 the deemed EDT would be New Year’s Eve, so the new rules would not apply to that individual and they would not have sufficient service to claim unfair dismissal. Clearly no-one would wish to be making such decisions, or receive such news on Christmas Eve, which is why we are advising you deal with such exits before then. In addition, you would need to ensure the decision has been clearly communicated to and received by the employee, which could be more difficult in the Christmas holiday period.
- Taking an example of dismissal with notice, if you dismissed with two weeks’ notice on Christmas Eve 2026, you would need to pay in lieu of at least the second week in order to ensure the EDT was before 1 January 2027.
What about probationary periods?
Six-month probationary periods are not uncommon. If someone joined on 1 July 2026, their six-month probation would end on 31 December 2026. However, for the reasons explained above, an employer cannot wait until 31 December 2026 to then decide that probation was unsuccessful and dismiss. If you dismissed at that point, whether with or without notice, the individual would have an actual or deemed EDT in the new year, meaning the new rules would apply to them and they would have the necessary six months’ service.
Our advice is to have probation periods of four months (with a one-month extension) or five months, but no longer.
What about contractual notice entitlements?
An individual’s contractual entitlement to notice of dismissal is often longer than their statutory entitlement. For example, they might be entitled to one month’s notice during probation and three months thereafter.
The application of the new unfair dismissal rules will be based on the individual’s EDT. As explained above, this is the actual last day of employment, subject to a possible deemed extension for statutory minimum notice.
If an employee’s contractual notice period would take them into 2027, you should consider paying in lieu of some or all of the contractual notice period to bring the actual last day of employment into 2026. In addition, ensure notice is given before Christmas, for the reasons explained above.
Will all unfair dismissal claims require six months’ continuous service?
No. The new rules relate to “ordinary” unfair dismissal claims. It remains the case that no continuous service is required for most automatically unfair dismissal claims, e.g. a claim that someone was dismissed for having made a protected disclosure (i.e. whistleblowing) or allegations of discrimination. We anticipate an increase in such claims from those exited during probation, so managing performance with a good audit trial will be essential.
Are there any requirements around how the decision to dismiss is communicated?
Contracts of employment sometimes specify how notice must be served (e.g. can it by email or does it require first class post). Employers should comply with any such requirements.
From an unfair dismissal perspective, the overriding requirement is to ensure that the individual is aware of the decision, to avoid the date of dismissal crossing into 2027 and triggering the new rules. The safest way to do this is to communicate the decision in person, in addition to any written confirmation.
If you would like to know more or discuss any of these issues, please contact Paul Reeves or your usual Stephenson Harwood contact.
This alert provides general guidance only and does not constitute legal advice. Specific advice should be sought in relation to individual matters.
