The Government have now issued an ‘Unfair Dismissal Factsheet’ to help employers navigate the upcoming changes to Unfair Dismissal protection.
It confirms that the cap on unfair dismissal compensation (currently the lower of a years’ pay or £118k) will be removed from 1 January 2027. It also sets out that the Government will not be consulting with unions or employers before removing the cap. This is a stark contrast to the Government’s position prior to the passage of the Employment Rights Bill, where they committed to undertaking an impact assessment prior to putting this change into action.
It also confirms the new six-month qualifying period for unfair dismissal protection. It reveals that this change will come into effect on 1 January 2027, with protection against unfair dismissal applying retrospectively from that date. This means that employees hired from 1 July 2026 will gain protection from unfair dismissal after six months.
We will be exploring these changes in further detail and discussing how businesses can prepare in our next Business Hub. You can find out more information about the event here.