Unfair dismissal changes: summary of stakeholder roundtables
Published 28 May 2026
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1. Summary of changes
The Employment Rights Act 2025 made changes to the legal framework for unfair dismissal. These reforms were the result of a series of constructive conversations with trade unions and business representatives, convened by the government to secure an agreed way forward.
The Employment Rights Act 2025 reduces the qualifying period for the right to claim unfair dismissal from 2 years to 6 months. Alongside this, the qualifying period for the requirement for an employer to provide written reasons for dismissal on request is reduced from 2 years to 6 months.
The act makes no changes to the existing framework for claiming unfair dismissal where there is currently no qualifying period (for example, most claims for automatically unfair dismissal).
The act also removes the cap on compensatory awards for successful unfair dismissal claims at employment tribunal. Claims will continue to be calculated on the basis of actual and projected losses evidenced by the claimant.
During passage of the legislation, the government set out in Parliament its intention to implement these changes from 1 January 2027.
The government has published a summary of the changes in the unfair dismissal factsheet.
The government has also published an economic assessment of the Employment Rights Act 2025, which includes an assessment on the impact of the changes to unfair dismissal and removal of the compensation cap.
2. Summary of feedback
The Department for Business and Trade (DBT) held stakeholder roundtables in January and February 2026 to gather views on:
- what the impacts of the changes to the law on unfair dismissal might be
- what steps might support the implementation of the changes
Groups representing employees and employers across the public and private sectors were invited to participate, to ensure a wide range of perspectives were included.
The government also held roundtables on specific sectoral issues, where these were requested, including with the professional services, finance and technology sectors.
To maintain the confidential basis on which the discussions were held, this summary sets out the representations made but does not attribute those to individuals or representative bodies.
The participants acknowledged that the value of most claims currently falls well below the existing cap, and it was confirmed that the changes will not change the method for calculating awards.
There was concern about how the removal of the cap could impact business decisions, including basing operations within the UK and hiring decisions, particularly for employers that recruit into highly-paid roles. It was suggested that guidance on how to manage performance and dismissal in executive roles would be helpful.
Participants sought clarity on how awards would be calculated. It was understood that the current method for calculating awards would not be changed. However, it was suggested that, particularly for executive roles, it would be helpful to have further guidance that could support employment tribunals, employers, and employees to understand how the changes could affect calculation.
The potential for the changes to increase burdens on the employment tribunal system were discussed and concerns about capacity and capability were raised. Reforms to the Dispute Resolution System and further guidance and support for the employment tribunal were seen as important for implementing these changes.
The government wishes to extend its thanks to all participants of the roundtables, which were constructive and informative.
3. Next steps
DBT will provide guidance for employers and employees on the changes to unfair dismissal, to help them understand the likely practical implications. However, guidance will not be able to change the law or anticipate developments in case law.
DBT, along with the Ministry of Justice, has set up the Dispute Resolution System Taskforce to consider longer-term system reforms. The taskforce’s expertise will help support the government to develop reform measures that promote a more efficient and resilient system.