The rules are changing. Your records must start before that

On 1 January 2027, the qualifying period for ordinary unfair dismissal falls from two years to six months, and the cap on compensation goes with it. From 1 October 2026, the claim window doubles to six months. These shifts widen who can claim, lengthen the time to do it and remove the ceiling on what it can cost.

HRLocker surveyed 1,500 UK employers and 500 employees to understand who is ready. 

Most are not….Are you?

Read the full report 

Calculate your exposure score to see the likelihood of facing a claim

What employers need to know

The Employment Rights Act 2025 reshapes unfair dismissal in three ways. Two of them land on the same day.

1 October 2026 – Claim window doubles

Employees have six months to bring most employment tribunal claims, up from three.

1 January 2027 – Qualifying period drops

Ordinary unfair dismissal protection begins at six months’ service, down from two years.

1 January 2027 – Compensation cap removed

The current ceiling (the lower of £123,543 or 52 weeks’ gross pay) disappears. Awards become uncapped.

The effect most have missed – The clock is already running

Anyone hired on or before 1 July 2026 has six months’ service on 1 January 2027. They are protected the day the rules land. Only 12% of employers know this clock is already running.

What it means in numbers

  • 2.2 million employees walk into protection on day one

An estimated 2.2 million people working for UK SMEs will have between six and twenty‑four months’ service when the rules take effect. That is the window where most SME dismissals already happen.

  • A further 1.5 million hired between 1 July and 31 December 2026 reach protection six months after they start

Four in five employers (80%) have dismissed someone in that six‑to‑twenty‑four‑month band in the last three years. Until now, the two‑year rule kept those exits out of tribunal reach. From January, it does not.

The signals employers can’t afford to ignore 

Across 1,500 employers and 500 employees, four patterns stand out. 

  1. Awareness is low: 93% of employers cannot identify all three changes, and only 12% know hires made before July 2026 are protected the day the rules land. 
  2. Documentation is thin: Confidence is high, but it’s misplaced, six in ten have no dedicated record system 
  3. Exposure is widespread: 80% of employers have dismissed someone in the new six‑to‑twenty‑four‑month danger window, and most claims already cost £10,000 or more. 
  4. Employees are ready to act: 57% would challenge a dismissal they felt was unfair. 

The Exposure Index

The Exposure Index combines three measures:

  • Dismissals in the six‑to‑twenty‑four‑month window
  • Repeated dismissals in three years
  • Lack of a dedicated record system

Recruitment and staffing tops the list. Agencies dismiss in the danger window more than any other sector, and 58% of them have no dedicated system to show for it.

Sector Exposure Index Score
Recruitment & staffing 66
Hospitality, food & leisure 62
Health & social care 61
Construction & skilled trades 60
Business support services 58
Manufacturing & utilities 57
Retail & wholesale 56
Other professional services 56
Legal services 55
Hospitality & leisure (if split) 55
Education 51
Financial services 49
Transport & logistics 49
Public administration 44
IT & telecoms 43
Agriculture 37

 

Download the full Exposure Index here

 

What a defensible record looks like

A defensible record is not complex. It starts on day one, stays in one place and is written while events are fresh rather than remembered afterwards. It is the difference between a decision and a defence.

“Employers do not need perfect records, but they do need records that are contemporaneous, consistent and capable of explaining why a decision was made.”  Amy Harvey, Consultant Solicitor

Employees agree. Over half (54%) say detailed records would make them less likely to challenge a dismissal. The file that defends the employer is the file that deters employees from bringing a claim in the first place.

Download the Defensible Record Checklist here

How HRLocker can help

To give you the full picture, every figure in the report is published with its responses and analysis, so leaders can see exactly where exposure comes from and how to reduce it. 

Download

 

A briefing by Industry

 

Regional Briefing

 

Company‑size briefing

HRLocker builds the systems that make defensible record‑keeping routine

  • Core HR provides one central location to store, manage and organise all employee data. Recruit streamlines hiring. 
  • Onboard delivers a smooth start for every new hire. 
  • Perform structures employee development, capturing expectations, check-ins, in-the-moment feedback, progress tracking and performance analytics at the point they happen, to build a defensible record. 

Each product works independently, in combination or as part of the full HRLocker suite, providing accurate and compliant record-keeping that strengthens confidence, reduces risk and supports audit readiness. 

Frequently asked questions

When does the qualifying period change? 1 January 2027.

Is this the same as day‑one rights? No. The day‑one proposal was dropped in December 2025.

Which employees are affected first? Anyone hired on or before 1 July 2026.

What happens to the compensation cap? It is removed on 1 January 2027.

How long does an employee have to bring a claim? From 1 October, six months, up from three.

Does probation protect an employer? Not by itself. Probation is a process, not a shield.

What counts as a defensible record? Contemporaneous notes, kept consistently, in one place, explaining why a decision was made.

 

See how HRLocker can help you reduce exposure and build a defensible record