Unfair dismissal (UK)

The current regime

A dismissal is fair only if it is for one of the potentially fair reasons (conduct, capability, redundancy, statutory illegality, or some other substantial reason) and handled through a reasonable process. Claims go to an employment tribunal after mandatory ACAS early conciliation, currently within three months of dismissal, extending to six months from October 2026. Compensation currently comprises a basic award (calculated like statutory redundancy pay) and a compensatory award capped at £123,543 or 52 weeks' pay, whichever is lower.

What changes on 1 January 2027

Two structural shifts land together: the qualifying period falls from two years to six months, and the compensatory award cap is removed entirely. Together they move the UK sharply toward its neighbours: more employees eligible, sooner, with unlimited downside for a badly handled dismissal. Fire-and-rehire (dismissing staff to re-engage them on worse terms) becomes automatically unfair in most cases on the same date.

How the UK regime compares

Against Australia: the UK's two-year (soon six-month) qualifying period contrasts with Australia's six or twelve months, and the UK's soon-to-be-uncapped compensation contrasts with Australia's 26-week cap. Against New Zealand: the UK still runs a qualifying period at all, where New Zealand's personal grievance regime applies from day one but now excludes employees above NZ$200,000. Multi-country employers should resist reading one country's rules into another; the traps sit exactly where the systems look similar.