Unfair Dismissal New Rules 2027: What's Changing

Section 25 of the Employment Rights Act 2025 substitutes six months for two years in section 108 of the Employment Rights Act 1996 and omits section 124, the limit on the compensatory award.

Acas says dismissal and rehire will become an automatically unfair dismissal in most cases, a change Acas expects sometime in January 2027. Dismissal and rehire means dismissing someone then rehiring them on worse terms and conditions. In its consultation response the government says it aims to bring the fire and rehire protections into force in March 2027, alongside regulations on which contract changes count as restricted variations.

The amendments have effect in any case where an employee is dismissed before 1 January 2027 but the effective date of termination falls on or after that date.

• They do not have effect in any case where the effective date of termination falls before 1 January 2027.
• Acas says protection from unfair dismissal was expected to become a right from the first day of employment, but the government changed this to a 6-month qualifying period.
• Section 25 sits in Part 1 of the Act, and Parts 1, 2 and 4 of the Act extend to England and Wales and Scotland.

Today the limit on the compensatory award is the lower of £123,543 and 52 times a week's pay. From 1 January 2027, the limit on compensation for unfair dismissal will be removed.

• The compensatory award is such amount as the tribunal considers just and equitable in all the circumstances, having regard to the loss you sustained because of the dismissal, in so far as that loss is attributable to action taken by the employer.
• The tribunal applies the same rule about the duty to mitigate loss as applies to damages recoverable under the common law.

For the award as it works today, see our guide to unfair dismissal compensation.

Until 1 January 2027 the current rules apply. If you are dismissed today:

• Section 94 does not apply to your dismissal unless you have been continuously employed for a period of not less than two years ending with the effective date of termination.
• You do not need 2 years' service to claim automatically unfair dismissal, according to Acas.
• If your problem happened on or after 1 October 2026, you have 6 months minus 1 day for most claims; if it happened before then, you have either 3 months minus 1 day for most claims or 6 months minus 1 day for a few claims.
• In Scotland, the time limit for breach of contract claims will not change until 9 November 2026.
• Early conciliation can last up to 12 weeks.

Acas lists several changes from the Act that have already happened:

• From 6 April 2026, statutory sick pay is paid from the first day of illness, instead of the fourth day, and the lower earnings limit has been removed.
• From 6 April 2026, paternity leave and ordinary parental leave became day one rights.
• On 18 February 2026, dismissal for taking part in industrial action became automatically unfair.

See our paternity leave guide.

Acas says the government has not announced when in 2027 most of the other changes will happen, and that workers on zero-hours and low-hours contracts will get the right to guaranteed working hours, if they want them, compensation if a shift is cancelled, shortened or moved to another time, and reasonable notice of shifts and changes to shifts. See our guides to sick pay and zero-hours contracts.