The unfair dismissal 6-month rule: what actually changes on 1 January 2027

Is day-one unfair dismissal still happening?

No. The headline everyone remembers - protection from unfair dismissal from the first day of the job - was widely reported while the Employment Rights Bill was going through Parliament, and plenty of articles written at the time still say it. But the day-one proposal was dropped. What replaced it is a shorter qualifying period: 6 months instead of 2 years, from 1 January 2027, per the official guidance on business.gov.uk.

That's a genuinely big change - a quarter of the old qualifying period - but it is not the same thing as day-one rights. If you've been planning around "we can't dismiss anyone safely, ever", you can relax a little. If you've been planning around "we have two years to make our mind up", you need to change how you work, and reasonably soon.

What changes on 1 January 2027?

Two things happen on the same date, both set out in the government's employment changes guidance:

Everything else about unfair dismissal law stays as it was: you still need one of the potentially fair reasons (capability, conduct, redundancy, illegality, or some other substantial reason), and you still need to follow a fair process. What changes is who can bring a claim and how much a lost claim can cost.

How does the transition to the 6-month rule work?

The pivot is the effective date of termination - the date the dismissal actually takes effect - not the date someone was hired, and not the date you started the process.

That last row is worth dwelling on. Because the rule bites by dismissal date and counts service already built up, anyone you employed by around 1 July 2026 will already have unfair dismissal protection the day the rule lands. That July date isn't a statutory cut-off - it's simple arithmetic: 1 July 2026 plus 6 months is 1 January 2027. People you hire this autumn will cross the 6-month line in the first half of 2027.

Is there a new statutory probation period?

No. Earlier versions of the reform debate talked about a statutory probation period - a fixed initial window with a "lighter-touch" dismissal standard. That is not being introduced. There is no new statutory probation regime; probation remains whatever your contract says it is.

The practical consequence: a contractual probation period is still a useful management tool - clear expectations, scheduled reviews, a defined decision point - but from 1 January 2027 it is not a legal shield once someone passes 6 months' service. If your probation periods run to 6 months or longer, the end-of-probation decision will now happen inside protected territory. We've written a full guide to how probation works under the 2027 rules.

What happens to the compensation cap?

For dismissals taking effect on or after 1 January 2027, the statutory cap on the compensatory award is removed. The basic award and the requirement to prove actual loss don't change - a tribunal won't invent losses that don't exist, and claimants still have a duty to mitigate. But for a higher earner with a long period out of work, the ceiling that used to limit exposure is gone. For a small employer, that shifts unfair dismissal from "bounded risk" to "risk you really want to avoid through fair process".

What should small employers do now?

Nothing here requires panic - it requires habits. The employers who'll be fine in 2027 are the ones who treat the first six months the way good employers already treat year three:

• Document performance from month one. Short written notes from check-ins, clear objectives, and honest feedback delivered early. If a new hire isn't working out, the record should show you noticed, said so, and gave them a fair chance to improve.
• Run a real probation process. Scheduled reviews, a written outcome at each one, and a decision point comfortably before 6 months. Our probation guide includes a review meeting structure you can lift.
• Follow a fair process for every dismissal, at any length of service. A fair reason, an investigation proportionate to the issue, a meeting where the employee can respond, and an appeal. From 2027, "they'd only been here eight months" is no longer an answer.
• Time any borderline decisions consciously. Between now and January 2027, the old rule still applies to dismissals that take effect before the date - but decide on merit and fairness first; the transition is a fact to know, not a tactic to lean on.
• Get the basics tidy. Contracts, policies and the statutory rates you rely on - our statutory rates 2026-27 reference and HR templates are a good starting point, and the April 2026 family-leave changes are worth folding into the same policy review.

How CoDash helps you get ready

A 6-month unfair dismissal world is, above all, a documentation world. CoDash keeps probation dates and review prompts on the record automatically, stores 1:1 notes and objectives against each person, and its ER case trail means that when you do have to defend a decision, the evidence is already in one place - not scattered across inboxes. See how it fits together.

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