Regulations have been made confirming that the anticipated unfair dismissal changes under the Employment Rights Act 2025 (ERA 2025) will come into effect on 1 January 2027.
The Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026 bring into force the section of the ERA 2025 that reduces the qualifying service required for unfair dismissal claims from two years to six months and removes the current cap on the compensatory award.
The changes will apply in any case where the effective date of termination (EDT) is on or after 1 January 2027. This means that the provisions will apply in situations where the date of dismissal is before 1 January 2027, but the EDT falls on or after this date because the employer has not given the minimum statutory notice to the employee.
The Department for Business and Trade (DBT) has published a summary of feedback it has received from stakeholder roundtables held to gather views on the impact of the unfair dismissal changes and what steps might support the implementation of the reforms. DBT says in the policy paper that it will produce guidance for employers to help them understand the likely practical implications of the changes. Along with the Ministry of Justice, it has also set up the Dispute Resolution System Taskforce to consider longer-term system reforms.
