Changes To The Employment Rights Act With Effect From 1st October 2026 And 1st January 2027

There are significant changes to unfair dismissal law under the Employment Rights Act 2025,
which come into force on 1 January 2027

 

These follow changes that took effect on 1 October 2026. Together they make a substantial difference to the protection against unfair dismissal.

In force from 1 October 2026: longer time limits for tribunal claims
The time limit for bringing most employment tribunal claims increases from three months to six months from 1 October 2026.

The new limits apply only where the relevant act, detriment or termination takes place on or after that date, so the change will not help members whose dismissal or other complaint pre-dates 1 October 2026.

The extension covers claims such as unfair dismissal, discrimination and whistleblowing. Members should still be advised to seek advice promptly, as evidence is easier to gather early. Acas early conciliation continues to apply before a claim is issued.

Variations in Scotland and Wales

Wales.
The extension from three to six months applies in England and Wales from 1 October 2026. For breach of employment contract claims by employees in England and Wales, the new six-month limit applies where the termination of the contract occurs on or after 1 October 2026. The unfair dismissal changes from 1 January 2027 also apply on the same basis in Wales as in England.

Scotland.
The headline changes apply in Scotland on the same dates, with one exception. For breach of employment contract claims, the change is delayed until 9 November 2026 in Scotland. For those claims, the six-month limit applies where the date of termination of the contract falls on or after 9 November 2026.

A Scottish member whose contract was terminated between 1 October and 8 November 2026 therefore still has the three-month limit for a breach of contract claim. This is likely because contract claims in Scotland are governed by separate jurisdiction rules from those in England and Wales.

The English and Welsh order extending the contract claim limit applies only in England and Wales, while the wider regulations extending most time limits apply across England, Scotland and Wales.

Northern Ireland.

Most of the Act's provisions apply only in Great Britain and not in Northern Ireland, so members in Northern Ireland should not assume the same changes apply to them.

From 1 January 2027

Qualifying period reduced to six months.

The qualifying period for ordinary unfair dismissal protection reduces from two years to six months, and applies where the effective date of termination falls on or after 1 January 2027.

There is no transition period, so everyone with at least six months' continuous service from that date is protected. In practice, employees who start on or after 1 July 2026 will gain protection once they reach six months' service.

The change will particularly benefit newer starters, who currently have no protection against ordinary unfair dismissal. It applies in England, Wales and Scotland alike.

Compensation cap removed.

Both elements of the current cap (the lower of 52 weeks' gross pay or a fixed statutory limit, currently £123,543) are abolished from 1 January 2027.

The provision (section 124 of the Employment Rights Act 1996) is repealed, so compensatory awards will be based on the member's actual financial loss. Unfair dismissal awards will then be "unlimited", as they already are in discrimination and whistleblowing claims. This is particularly significant for higher-paid members and for those who find it hard to secure new employment.

Fire and rehire.

The Government's updated timetable lists the fire and rehire protections as also taking effect in January 2027, alongside the unfair dismissal changes.

Correction to earlier guidance

Earlier versions of this guidance described the cap as "one year's pay". The cap was in fact the lower of 52 weeks' pay and the fixed statutory limit, which is why it often bit hardest on higher earners.

Overall assessment

Taken together, these measures are a significant step in the right direction for employee rights at work, and in particular the right not to be unfairly dismissed.

Action for CWU Branches

Branch Secretaries and Legal and Medical Secretaries should familiarise themselves with these changes when consulting with members. They should:

• check the date of the event complained of, as this determines whether the three-month or six-month limit applies


• for Scottish members with a breach of contract claim, check whether termination fell before or after 9 November 2026


• check the member's start date and the effective date of termination when assessing eligibility for unfair dismissal protection


• take note that members dismissed on or after 1 January 2027 with between six months' and two years' service may now have a claim

Source: Based on CWU’s Letter to Branches (LTB280/26) from Ian Taylor, Head of Legal Services