Employers across the luxury retail, fashion, hospitality and high-end services sectors will face one of the most significant shake-ups of UK employment law in years when the qualifying period for unfair dismissal claims is cut from two years to six months on 1 January 2027, under the Employment Rights Act 2025.
The change, which applies in England, Scotland and Wales, will be accompanied by the removal of the statutory cap on compensatory awards for successful ordinary unfair dismissal claims, potentially increasing payouts in some cases. Existing day-one protections against discrimination and automatically unfair dismissal are unaffected.
