The ‘day one unfair dismissal’ rights were one of the main sticking points for the new Employment Rights Act with the majority in the House of Lords being concerned at the impact on business – several times they had proposed amendments to this reform, suggesting that a six-month qualifying period would be a better balance between helping workers and businesses and would avoid complications arising from the proposed “initial period of employment”.

The Employment Rights Act 2025 therefore introduces the following important changes:

• the qualifying period of employment for a UK employee gaining unfair dismissal protection will be six months, reduced from the current two years.
• the cap on the amount of compensation that can be awarded by an employment tribunal for unfair dismissal will be removed, leaving compensation unlimited in the same way as it is for discrimination and whistleblowing claims.
• employees will have six months from their termination date to initiate an unfair dismissal claim, up from the current three months.

Key details:

Effective date: 1 January 2027

Who is covered: employees with at least six months’ service on 1 January 2027 will automatically gain protection from unfair dismissal on that date. It is important to note that the new six month threshold applies to dismissals on or after 1 January 2027, rather than only to new recruits from that date.

Points to note are:
• there will still be some circumstances in which individuals have day one protection from unfair dismissal (eg whistleblowers)
• there will no longer be a cap on unfair dismissal awards (the current cap on compensatory awards being the lower of the year’s pay and £118,223)

Compensation will still be based on lost earnings and it should be remembered that the average unfair dismissal award is currently around £14,000, so well below the current cap. Removal of the cap on compensation could, however, have a significant impact on the ability to settle claims if claimants with unrealistic initial expectations can no longer be told that there is a clear limit to their claim.

Action by employers:

These changes are significant and employers should use the 2026 lead-in period to do the following:
• strengthen recruitment practices
• review existing probationary periods and ensure multiple checkpoints through probation
• handle conduct and performance issues promptly and document all incidents thoroughly
• refresh manager training on fair process and note early intervention to avoid crossing the six month threshold without action
• look carefully at processes that apply to the expiry of fixed-term contracts.

The importance of acting fairly is compounded by changes to the unfair dismissal compensation regime, with the financial stakes significantly raised for employers who get it wrong.

In summary:
• if you are an employee: you’ll get unfair dismissal rights much sooner, after just six months of employment.
• if you are an employer: you can no longer rely on the period of two years to dismiss someone without facing an unfair dismissal claim; focus on robust early management and clear documentation.

For any advice please email nicola.goodridge@goodhr.co.uk or call +44 7917 878384

Under the Employment Rights Act 2025, the Government plans to provide greater protections for zero hours and low hours workers. The law requires employers to offer zero hours and low hours workers:

• contracts with guaranteed hours; and
• to provide reasonable notice of shifts, shift changes and cancellations.

A low “hours” contract is one which specifies a minimum number of guaranteed hours not exceeding a threshold (still to be determined).

A Government consultation on the details is expected to be published early in 2026.

Guaranteed hours

• Employers will have to offer zero hours and low hours workers a contract with guaranteed hours, reflecting the number of hours they regularly worked during a reference period.
• Workers will not be obliged to accept the offer, so they will be able to remain on zero hours or low hours contracts if they prefer.

This will be a continuing obligation, with employers obliged to offer a guaranteed hours contract after the end of each reference period (expected to be 12 weeks) even where a worker has previously refused the offer. Where a worker accepts a guaranteed hours contract but their regular hours in a reference period exceed those guaranteed hours, their employer will have to offer a further guaranteed hours contract reflecting those increased hours. The obligation will continue until the worker’s hours exceed the low hours threshold (so that they are no longer a ‘low hours’ worker).

Fixed term hours

Employers can offer guaranteed hours on a fixed-term basis if they can reasonably show a genuine, temporary need, such as for:

• a specific time limited task (ie: a specific project or event)
• covering for another employee, or
• fulfilling a defined seasonal demand, with the contract ending when that specific need ceases.

Note the employer must reasonably believe use of a fixed-term contract is appropriate, not just to avoid permanent obligations.

What does this mean for workers and employers?

• Workers: don’t have to accept fixed-term offers and can remain on existing arrangements.
• Employers: must offer guaranteed hours reflecting regular work after each reference period (likely 12 weeks).

These rules aim to provide more security for zero-hours workers by requiring employers to guarantee hours reflecting actual work, while still allowing for genuinely temporary staffing needs.

Failure to offer guaranteed hours

Where an employer fails to comply with its obligations regarding guaranteed hours contracts, a worker will be able to bring a tribunal claim and be awarded compensation of such amount as the tribunal considers just and equitable, subject to a cap which will be specified in regulations.

Reasonable notice of shifts

Employers will have to give workers reasonable notice of:

• shifts (specifying the date, start time, end time and number of hours to be worked), and
• shift changes and cancellations.

The length of this ‘reasonable’ notice is not yet specified and will be subject to consultation.

Where reasonable notice is not given, workers will be able to bring tribunal claims and be awarded compensation, again of such amount as the tribunal considers just and equitable, subject to a cap which will be specified in regulations.

Workers will also be entitled to payment for:

• shifts cancelled,
• moved or
• curtailed at short notice.

The amount of the payment will be specified in regulations but will be unlikely to exceed the amount the worker would otherwise have received for the shift. Workers will be able to bring a tribunal claim if the employer fails to pay.

Other tribunal claims

It will be automatically unfair to dismiss an employee for reasons relating to these rights, including:

• for accepting/rejecting a guaranteed hours offer,
• in order to avoid having to offer them guaranteed hours or
• because the worker believes that they are entitled to a guaranteed hours offer.

Workers will also have the right not to be subjected to a detriment in various circumstances including:

• because they accepted/rejected guaranteed hours,
• because they declined to work a shift as they reasonably believed the employer had not given them reasonable notice, or
• because they have brought a tribunal claim in good faith to enforce their rights.

Action points

• Start auditing your workforce to identify how many workers you engage on zero or low hours who could potentially be entitled to the new rights.
• Identify seasonal fluctuations in demand for work to identify where fixed-term contracts may be more appropriate.
• Review systems for managing shifts and shift changes and consider what changes may be required.

For advice email nicola.goodridge@goodhr.co.uk or call +44 7917 878384