Your Employee Could Claim Unfair Dismissal After Six Months. Is Your Business Ready?
At the moment, an employee needs two years of continuous service before they can bring an unfair dismissal claim against you.
That is about to change.
Under the Employment Rights Act 2025, the qualifying period is being reduced to six months. It is not yet in force, but it is coming, and when it arrives, it will be one of the most significant shifts in employment law for small business employers in a generation.
Here is what it means in practice, and what you need to have sorted before it does.
What is changing?
- Currently, if you dismiss an employee in their first two years, they generally cannot bring an unfair dismissal claim at an employment tribunal. That does not mean you can dismiss without any process, but it does mean the legal exposure has historically been lower in that early period.
- From the point this change comes into force, an employee will be able to bring an unfair dismissal claim after just six months of employment.
- The cap on the compensatory award for unfair dismissal is also being removed. At the moment, there is a statutory cap on what a tribunal can award. That cap is going. The financial exposure from getting a dismissal wrong is therefore increasing on two fronts – more employees will be able to claim, and the amount they can be awarded is no longer capped in the same way.
What this means for small employers
If you employ staff, this change affects how you manage people from the moment they start.
The businesses that get into trouble with unfair dismissal claims are almost always the ones that did not have a proper process in place. No clear probationary period. No documented concerns. No record of conversations about performance or conduct. Just a decision made when things had already gone wrong, without the paperwork to back it up.
With a two-year qualifying period, there was more room to correct course. With a six-month period, there is not.
- Probationary periods – get them right now
A well-drafted probationary period clause is your first line of protection. It needs to set out clearly what the probationary period is, what the expectations are, what the review process looks like, and what the notice period is during that time.
A probationary period that just says ‘you will serve a probationary period of three months’ is not enough. It needs to be backed up by a process. Regular check-ins, documented conversations, and written confirmation if concerns are raised.
If your contracts do not have a properly drafted probationary period clause, or if your probationary process exists only in theory and not in practice, this is the time to sort it.
- Documentation – if it is not written down, it did not happen
This is the part most small employers struggle with because it feels like admin on top of everything else they are managing.
But documentation is what protects you. If you dismiss someone and they bring a claim, the question a tribunal will ask is: what did you do, when did you do it, and how do you know? A conversation you had but did not write down is very difficult to rely on. An email confirming what was discussed, sent the same day, is evidence.
Get into the habit of documenting performance concerns, conduct issues, and any conversations about either as they happen – not when things have already escalated. A short email to yourself, a note on the employee’s file, a letter confirming a conversation. It does not need to be complicated. It needs to exist.
- Your disciplinary process – does it actually work?
Most small businesses have a disciplinary procedure somewhere – in the staff handbook, in the contract, or downloaded from the internet years ago. The question is whether it is fit for purpose and whether it is actually followed.
A disciplinary process that exists on paper but is never used properly will not protect you at a tribunal. If you have not looked at yours recently, look at it now. Does it set out the steps clearly? Does it give employees the right to be accompanied? Does it reflect the current ACAS Code of Practice?
If the answer to any of those is no or not sure, it needs attention.
When does this change come into force?
This specific change is still being phased in and is not yet in effect. However, the Employment Rights Act 2025 has a clear roadmap, and this is one of the headline measures.
The time to prepare is now. Not when the change lands and you suddenly have a workforce where everyone who has been with you for six months has full unfair dismissal rights, and your documentation, probationary processes and disciplinary procedures are not where they need to be.
What to actually do
- Pull out your employment contracts. Check the probationary period clause. Is it properly drafted? Does it reflect how you actually manage people in their first few months?
- Pull out your staff handbook. Does your disciplinary procedure follow the ACAS Code of Practice? Is your grievance process clearly set out?
- Think about the employees you have right now. If any of them are approaching or past the six-month mark, are you confident your processes and documentation would hold up if challenged?
If the answer to any of this is no, or you are not sure, a 30-minute consultation will tell you exactly where you stand.
How we can help
We work with employers across England and Wales – getting contracts, probationary processes and disciplinary procedures properly sorted before they are needed.
- Our website will be able to provide more information on how we can help you: www.mckenzielegalandhr.co.uk/employment-legal-advice
- A 30-minute consultation is £50. We will tell you honestly what needs attention and give you a fixed fee before any work starts. If you instruct us within seven days, the consultation fee comes off your first invoice.
www.mckenzielegalandhr.co.uk/contact-us or call us on 0118 321 4188.