You’ve probably heard there’s a change coming to unfair dismissal law. You might even know roughly when. What you probably don’t know is what it actually changes for you, day to day, the next time someone in your business isn’t working out.
So let’s sort that.
What’s changing
Right now, an employee needs two years’ service before they can bring a standard unfair dismissal claim. That’s been the rule for a long time, and a lot of small business owners have leaned on it more than they realise — get someone six months in who’s just not right, and you can let them go without worrying too much about process.
From January 2027, that two-year qualifying period goes. Employees will be able to claim unfair dismissal from day one.
That’s not a small tweak. That’s the safety net most founders didn’t know they were relying on, gone.
What this doesn’t change
A few things stay exactly as they are, and it’s worth being clear on these so you’re not panicking about the wrong thing.
Automatically unfair reasons for dismissal — things like dismissing someone for being pregnant, for whistleblowing, for asserting a statutory right — have never needed two years’ service. If you’ve been doing this properly already, none of that changes.
Gross misconduct is still gross misconduct. Someone who steals from you, or is violent at work, or does something that genuinely breaches trust beyond repair — you can still act on that, day one or day 1,000.
What changes is the middle ground. The “this isn’t working out, performance isn’t there, it’s not a culture fit” dismissals — the ones a lot of founders currently handle with a quiet conversation, a probation period review and/or a final pay cheque. Those need a process now, from the start.
Why this actually matters to you
Here’s the bit that should make you stop and check your own setup, not just nod along.
A badly handled dismissal doesn’t have to go all the way to tribunal to cost you. Even a claim that never gets near a hearing room eats time — yours, mostly — and usually ends in a settlement to make it go away. £10–15k is a realistic number for something that should never have needed to happen. Get it properly wrong, and a tribunal award can run well past that.
And it’s not really about the money. It’s the three weeks you spend distracted by it instead of running the business. The conversation with your other staff about why someone left under a cloud. The version of you at 9pm rereading an email from a solicitor instead of doing literally anything else.
What actually protects you
Not a handbook. I’ll say that bluntly because it’s the thing most founders get wrong — they think having a policy document somewhere means they’re covered. It doesn’t. A handbook nobody followed is worse than no handbook at all, because it proves you knew what good looked like and didn’t do it.
What protects you is process, applied consistently, from the day someone starts:
A probation period that’s actually structured — not just a date in a contract, but check-ins, written notes, a clear sense of what “passing” looks like.
A paper trail. Not corporate box-ticking — just enough record that if someone asks “why,” you can show your working.
Consistency. The same standard applied to everyone, not a different bar depending on who you like.
If you’ve got those three things in place properly by the time January 2027 lands, this change barely touches you. If you don’t, every new hire from now becomes more exposed than the last one.
Where to start
If you’re reading this thinking “I genuinely don’t know what our probation process even is” — you’re not alone, and you’ve got time to fix it before it matters. Get it sorted before 1 July 26 if you can; that gives you a clean run-in before the legislation actually bites.
If you want a second pair of eyes on what you’ve currently got — or an honest answer on whether it’ll hold up — that’s exactly the kind of thing I look at with clients. Get in touch and we’ll have a look together.
