Unfair Dismissal in the UK (2026): Fair Reasons, the 2027 Six-Month Rule and What a Claim Is Worth

Unfair dismissal is the claim an employee can bring when they're sacked without a fair reason or without a fair process. This guide is for UK small business owners deciding whether and how to dismiss someone, and for employees working out whether they have a case. It covers the five fair reasons, the reasonableness test tribunals apply, who's protected now and from 1 January 2027, how compensation is calculated in pounds, Acas early conciliation and the six-month time limit, and the mistakes that most often turn a defensible dismissal into a lost claim.

Quick answer

A dismissal is unfair if the employer had no potentially fair reason (capability, conduct, redundancy, illegality or some other substantial reason), or acted unreasonably in treating it as enough to dismiss — usually by skipping a fair procedure. Employees currently need 2 years of service to claim; for dismissals from 1 January 2027 that drops to 6 months, and the cap on the compensatory award is removed.

• Automatically unfair reasons (pregnancy, whistleblowing, asserting a statutory right) need no service

• Basic award uses a week's pay capped at £751; compensatory award capped at £123,543 or 52 weeks' pay if lower until 2027

• Notify Acas before claiming — early conciliation can last up to 12 weeks

• Claims must start within 6 months of dismissal (from 1 October 2026)

• No tribunal fee; Northern Ireland has its own rules

What unfair dismissal means

Under the Employment Rights Act 1996, every employee has the right not to be unfairly dismissed, subject to a qualifying period. A tribunal asks two questions in order. First, what was the real reason for the dismissal, and is it one of the potentially fair reasons the Act lists? The employer has to prove the reason. Second, in all the circumstances — including the size and resources of the business — did the employer act reasonably in treating that reason as sufficient to dismiss? If the answer to either question is no, the dismissal is unfair.

"Dismissal" is wider than being told "you're sacked". It also covers a fixed-term contract ending without renewal and constructive dismissal, where you resign because the employer seriously breached your contract — for example by not paying you, demoting you without explanation, making unreasonable changes to your work or failing to deal with bullying. GOV.UK warns that if you plan to claim constructive dismissal you should resign promptly, because staying on for long can be treated as accepting the employer's conduct.

Unfair dismissal is only for employees. Workers, such as many casual or gig staff, and the genuinely self-employed can't bring it, although they keep other protections, including against discrimination and detriment for whistleblowing. If you're unsure of your status, the employment status rules decide it, not the label on the contract.

It also helps to separate unfair dismissal from wrongful dismissal. Wrongful dismissal is a breach of contract claim, usually because notice wasn't given or paid, and it has no service requirement. Someone dismissed after three months without the week's notice they were owed can claim wrongful dismissal even though they can't claim unfair dismissal. See our notice period guide for how much notice is due.

The five fair reasons for dismissal

An employer must show the reason, or principal reason, for dismissal falls into one of these categories. Choosing the right one matters, because each brings its own expected procedure.

Potentially fair reasons and the process tribunals expect

Reason	Typical examples	What a fair process usually looks like
Capability	Poor performance despite support; long-term ill health	Warnings with targets and support; for ill health, medical evidence, consultation and adjustments
Conduct	Theft, lateness, refusing instructions, gross misconduct	Acas Code: investigate, hearing with companion, written outcome, appeal
Redundancy	Closure, relocation, fewer people needed for the work	Fair pool and criteria, consultation, alternative work offered
Statutory restriction	Driver loses licence; no right to work in the UK	Check facts, consider alternative roles before dismissing
Some other substantial reason	Business reorganisation, third-party pressure, end of a genuine temporary cover role	Explain the business need, consult, consider alternatives

Capability

Typical examples

Poor performance despite support; long-term ill health

What a fair process usually looks like

Warnings with targets and support; for ill health, medical evidence, consultation and adjustments

Conduct

Typical examples

Theft, lateness, refusing instructions, gross misconduct

What a fair process usually looks like

Acas Code: investigate, hearing with companion, written outcome, appeal

Redundancy

Typical examples

Closure, relocation, fewer people needed for the work

What a fair process usually looks like

Fair pool and criteria, consultation, alternative work offered

Statutory restriction

Typical examples

Driver loses licence; no right to work in the UK

What a fair process usually looks like

Check facts, consider alternative roles before dismissing

Some other substantial reason

Typical examples

Business reorganisation, third-party pressure, end of a genuine temporary cover role

What a fair process usually looks like

Explain the business need, consult, consider alternatives

There's no longer a separate retirement reason: compulsory retirement is only lawful if it can be objectively justified, otherwise it's likely to be age discrimination and unfair. GOV.UK also lists situations where continuing to employ someone has become impossible, which tribunals usually analyse under "some other substantial reason".

A fair reason won't save a dismissal that was really about something else. If a manager uses a redundancy exercise to get rid of someone who'd raised a grievance, the tribunal looks behind the label. Paperwork that's inconsistent — a "redundant" role re-advertised a month later, for instance — is the most common way the true reason comes out.

Is the dismissal reasonable? The test tribunals apply

The second question is where most claims are won or lost. A tribunal doesn't ask whether it would have dismissed. It asks whether dismissal fell within the band of reasonable responses that a reasonable employer might have adopted. In conduct cases tribunals look for a genuine belief in the employee's guilt, held on reasonable grounds after as much investigation as was reasonable. That standard is lower than the criminal one — you don't need proof beyond reasonable doubt — but you do need an investigation.

Procedure is the part employers control. For misconduct and poor performance, the Acas Code of Practice on disciplinary and grievance procedures sets the baseline: investigate, write to the employee setting out the case, hold a meeting where they can be accompanied, decide and confirm in writing, then offer an appeal. Our disciplinary procedure guide walks through each step. If an employer unreasonably ignores the Code, a tribunal can increase the compensation by up to 25%; if the employee unreasonably refuses to engage, it can cut it by the same amount.

The questions a tribunal asks

Step 1

Real reason?

employer must prove it

Step 2

Potentially fair?

one of the five

Step 3

Reasonable belief?

after a fair investigation

Step 4

Within the band?

of reasonable responses

Step 5

Fair procedure?

Acas Code, appeal

Size matters, but only up to a point. A five-person business isn't expected to have an HR department or a separate appeal panel, and tribunals take that into account. What it can't do is skip the basics: telling someone what the problem is, letting them answer it, and giving them a chance to challenge the outcome. A fair process also protects the employer if a tribunal finds the dismissal unfair for some other reason, because it can reduce compensation where a fair procedure would have led to the same result anyway — known as a Polkey reduction.

Who can claim: the qualifying period now and from 2027

Today an employee normally needs 2 years of continuous employment to claim ordinary unfair dismissal; in Northern Ireland it's one year. The Employment Rights Act 2025 cuts this to 6 months for dismissals with an effective date of termination on or after 1 January 2027, in England, Scotland and Wales. The original plan was day-one protection; Parliament settled on six months in late 2025.

The date that matters is the effective date of termination, not the date the decision was made. Statutory notice counts towards service even if it isn't worked. Between one month and two years' service the statutory minimum notice is one week, so an employee with five months and three weeks' service who's dismissed without notice may be treated as reaching six months once that week is added. If you're an employer planning a dismissal around the six-month mark, count carefully and take advice; see our probation period guide for practical timing.

Who can claim — at a glance

2 years

Service needed now

Dismissals before 1 Jan 2027

6 months

Service needed from 1 Jan 2027

England, Scotland, Wales

Day one

Automatically unfair reasons

e.g. pregnancy, whistleblowing

1 year

Northern Ireland

Separate legislation

The same change applies to the right to ask for written reasons for dismissal, which falls from two years' service to six months from 1 January 2027. If asked, the employer must provide the reasons within 14 days. Women dismissed while pregnant or on maternity leave get written reasons automatically, whatever their service. Fixed-term staff are also affected: business.gov.uk confirms that letting a fixed-term contract expire is a dismissal, so for anyone with six months' service from 2027 the non-renewal itself must be fair.

Automatically unfair reasons need no service

Some reasons make a dismissal automatically unfair, with no need to show reasonableness and, in most cases, no qualifying service. They include pregnancy and maternity, family leave such as paternity, adoption or shared parental leave, time off for dependants, making a flexible working request, whistleblowing, health and safety activities, trade union membership or activities, acting as an employee representative, jury service, taking part in protected industrial action, and asserting a statutory right such as the National Minimum Wage or working time rights. Dismissal because of political opinions or affiliation also has no qualifying period. Discrimination claims under the Equality Act 2010 are separate and protect workers and job applicants from day one.

How unfair dismissal compensation is calculated

A tribunal can order reinstatement (the old job back) or re-engagement (a comparable job), but in practice most successful claimants get money. Compensation has two main parts.

The basic award follows the same formula as statutory redundancy pay: half a week's pay for each complete year of service under age 22, one week's pay for each year aged 22 to 40, and one and a half weeks' pay for each year aged 41 or over, counting back from the effective date of termination with a maximum of 20 years. A week's pay is capped at £751 gross for dismissals from 6 April 2026. If the employee was made redundant and has already received statutory redundancy pay, that's usually set against the basic award. Where the dismissal is automatically unfair for certain reasons — health and safety, acting as an employee representative or trade union reasons, for example — there's a minimum basic award of £9,157.

The compensatory award is what a tribunal considers "just and equitable" to cover the employee's financial loss: net pay lost up to the hearing, future loss until they're likely to find comparable work, lost pension contributions and benefits, and a modest sum for the loss of statutory rights, since they'll have to build up service again. The employee must try to mitigate — look for work — and earnings from a new job reduce the loss.

For dismissals before 1 January 2027 the compensatory award is capped at £123,543 or 52 weeks' pay if lower. From 1 January 2027 that cap goes for ordinary unfair dismissal. business.gov.uk stresses that awards will still reflect actual and projected losses the claimant can evidence, and most are well below the old cap, so the change mainly affects higher earners and long periods out of work. Whistleblowing and health and safety dismissals were already uncapped.

Tribunals then apply adjustments: the Acas Code uplift or reduction of up to 25%, a Polkey reduction if a fair process would probably have led to dismissal anyway, and a reduction for contributory fault if the employee's own blameworthy conduct contributed. A badly handled dismissal of someone who was genuinely guilty of serious misconduct can end up worth very little.

Worked example: what an unfair dismissal claim is worth

Daniel, 45, has worked for eight years as a warehouse supervisor for a family-run distribution firm in Northampton. He earns £900 a week gross (£680 net) and the employer pays 3% of salary into his pension. In February 2027 he's dismissed for alleged poor performance at a single meeting with no warnings, no chance to bring a companion and no appeal. He's out of work for 20 weeks, then finds a job paying £60 a week less net. He claims unfair dismissal and wins; the tribunal finds no contributory fault.

Because Daniel was dismissed after 1 January 2027 there's no compensatory cap, but it wouldn't have bitten here anyway. Before 2027 the cap is the lower of £123,543 or 52 weeks' pay if lower and 52 weeks' gross pay — £46,800 for Daniel. Compare a sales director on £2,000 a week who is out of work for 18 months: losses could exceed £150,000, but a dismissal in December 2026 would be capped at 52 weeks' pay, £104,000, while the same dismissal in January 2027 would not. If he'd only lost the case on procedure and the tribunal thought a fair process gave a 50% chance he'd have been dismissed anyway, the compensatory award would be halved.

Awards are taxed under the termination payment rules: compensation for loss of employment is generally within the £30,000 exemption, while pay that would have been earned during notice is taxable. Our termination payments guide explains the split.

How to bring a claim: Acas early conciliation and the tribunal

Before you can make a tribunal claim you must notify Acas. Acas then offers early conciliation: a conciliator talks to both sides and tries to agree a settlement. It's voluntary and free. For notifications made on or after 1 December 2025 the early conciliation period can last up to 12 weeks, doubled from six weeks to relieve pressure on tribunals.

From dismissal to tribunal

1. 1

   Appeal internally (optional but sensible)

   Use the employer's appeal process. It doesn't stop the tribunal clock, but failing to appeal can reduce an award under the Acas Code.

2. 2

   Notify Acas within the time limit

   Complete the early conciliation notification online. The tribunal clock pauses while conciliation runs.

   Notify Acas
3. 3

   Conciliate

   Up to 12 weeks. If you agree terms, Acas records them in a binding COT3 agreement and the case ends.

4. 4

   Get the certificate

   If there's no settlement, Acas issues a certificate with a number you need for the claim form.

5. 5

   File form ET1

   Claim online or by post. You have at least one month from the certificate, within the overall time limit.

6. 6

   Prepare for the hearing

   Exchange documents and witness statements, prepare a schedule of loss and keep records of job applications.

The time limit for unfair dismissal is now 6 months — in practice six months less one day — from the effective date of termination, for dismissals on or after 1 October 2026. It used to be three months. Running an internal appeal doesn't extend it; only notifying Acas pauses the clock. Tribunals can extend the time limit for unfair dismissal only where it wasn't reasonably practicable to claim in time, which is a strict test, so don't rely on it.

GOV.UK confirms there's no fee to bring an employment tribunal claim. For certain automatically unfair dismissals — whistleblowing, trade union activities, health and safety and acting as a representative — the employee can also ask for interim relief, an order keeping them on the payroll until the hearing, but the application must be made within 7 days of dismissal.

What changes in 2026 and 2027

Several changes from the Employment Rights Act 2025 land within a few months of each other, and they compound. Longer time limits mean claims can arrive later; a shorter qualifying period means more people can claim; and the lifted cap means high-value claims are more expensive.

Unfair dismissal timeline

1 Dec 2025

Acas early conciliation extended to 12 weeks

18 Dec 2025

Employment Rights Act 2025 becomes law

6 Apr 2026

Week's pay cap £751; compensatory cap £123,543 or 52 weeks' pay if lower

1 Oct 2026

Tribunal time limit becomes 6 months

1 Jan 2027

Qualifying period 6 months; compensatory cap removed

January 2027 (planned)

Fire and rehire protections, subject to regulations

The government's timeline also lists new fire and rehire protections for January 2027. Under the Act, dismissing someone for refusing to agree to certain contract changes — or replacing them on new terms to get round a refusal — will generally be automatically unfair, with a narrow exception for employers facing serious financial difficulty. The details depend on regulations, so check the official timeline before restructuring terms and conditions. The government also says all future dates remain subject to parliamentary processes.

For employers, the practical upshot is that the "under two years, low risk" assumption is ending. Anyone who started on or before about 1 July 2026 will have six months' service on 1 January 2027. If you're considering a dismissal now, the old rules apply only if the effective date of termination — including any notice — falls before 1 January 2027.

Common mistakes and how to avoid them

Deciding first, holding the meeting later. Tribunals regularly see dismissal letters drafted before the hearing. Make the decision after hearing the employee, and record why.

Picking the wrong reason. Calling a performance problem "redundancy" to avoid a difficult conversation is risky: if the role is re-filled, the stated reason collapses.

Ignoring the effective date. Employers who think they're dismissing at five months can find notice tips the employee over six months from 2027. Work out the effective date of termination including statutory notice.

Forgetting day-one rights. Short service doesn't help if the real reason was a protected one — pregnancy, a whistleblowing disclosure or a complaint about the minimum wage — or if the dismissal was discriminatory.

Not mitigating. For employees, failing to look for work is the quickest way to shrink an award. Keep a log of applications from the first week.

Missing the deadline. Six months sounds generous, but the clock starts on the last day of employment, and internal appeals don't stop it. Notify Acas early.

Settling instead of going to a tribunal

Most unfair dismissal disputes settle. There are two ways to make a settlement binding so the employee can't later claim: an Acas-conciliated COT3 agreement, or a settlement agreement signed after the employee takes independent legal advice. Employers often pay towards that advice. A settlement usually includes a payment, an agreed reference and confidentiality terms, and it's taxed under the same termination payment rules as any other exit payment. Our settlement agreement guide covers the requirements and tax in detail. For redundancies specifically, see the redundancy process guide.

Northern Ireland is different throughout. The qualifying period there remains one year, it has its own tribunals and early conciliation through the Labour Relations Agency, and the Employment Rights Act 2025 changes don't extend to it.

Before you dismiss — employer check

0/7

• Identify the real reason and which fair category it falls into
• Check service and the effective date of termination, including statutory notice
• Rule out automatically unfair or discriminatory reasons
• Follow the Acas Code: investigation, written invitation, companion, decision, appeal
• Consider alternatives — training, adjustments, another role
• Give the correct notice or pay in lieu, and confirm reasons in writing
• Keep records for at least the 6 months claim window plus conciliation

Share Print

Official links

• Unfair dismissal rights from 1 January 2027Six-month qualifying period and cap removal
• Dismissal: your rightsGOV.UK guidance for employees
• Dismissing staffGOV.UK guidance for employers
• Acas early conciliationNotify Acas before claiming
• Make a claim to an employment tribunalForm ET1, time limits, no fee
• Employment Rights Act 1996, section 98Fair reasons and reasonableness

What to do next

If you're an employer, write down the reason, check service against the 1 January 2027 date, and run the right procedure — the disciplinary procedure guide for conduct and capability, or the redundancy process guide for job losses. Then work out notice with the notice period guide and statutory pay with the redundancy pay guide. If you're an employee, note your last day of employment, appeal internally, and contact Acas on 0300 123 1100 well within the time limit.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

How long do you have to work somewhere to claim unfair dismissal?

For dismissals with an effective date of termination before 1 January 2027, you normally need 2 years of continuous employment. From 1 January 2027 that falls to 6 months in England, Scotland and Wales, and the statutory notice you're owed counts towards it. Automatically unfair reasons, such as whistleblowing or pregnancy, need no qualifying service at all.

What are the five fair reasons for dismissal?

The Employment Rights Act 1996 recognises capability (including ill health), conduct, redundancy, a statutory restriction that makes continued employment illegal, and some other substantial reason, such as a genuine business reorganisation. Having one of these isn't enough on its own: the employer must also act reasonably and follow a fair procedure.

How much compensation do you get for unfair dismissal?

Usually a basic award, worked out like statutory redundancy pay with a week's pay capped at £751, plus a compensatory award for actual and expected losses. For dismissals before 1 January 2027 the compensatory award is capped at £123,543 or 52 weeks' pay if lower. That cap is removed for dismissals from 1 January 2027, but awards still only cover losses you can evidence.

What is the time limit for an unfair dismissal claim?

For dismissals on or after 1 October 2026 you have 6 months (in practice six months less one day) from the effective date of termination. You must notify Acas for early conciliation within that time; doing so pauses the clock, and you get at least one month after the certificate to file your claim.

Is there a fee to make an unfair dismissal claim?

No. GOV.UK confirms there's no fee to make a claim to an employment tribunal. You may have other costs, such as legal fees or witness expenses, and a tribunal can order you to pay the other side's costs if you behave unreasonably, but that's rare.

What is the difference between unfair and wrongful dismissal?

Unfair dismissal is a statutory claim about whether the reason and process were fair, and normally needs qualifying service. Wrongful dismissal is a breach of contract claim, usually about notice pay that wasn't given, and has no service requirement. One dismissal can be both, and they're often claimed together.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 13 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Unfair dismissal rights (employment changes for employers) — Department for Business and Trade (business.gov.uk) · accessed 13 October 2026
2. 2.Dismissal: your rights — GOV.UK · accessed 13 October 2026
3. 3.Employment tribunals — GOV.UK · accessed 13 October 2026
4. 4.How early conciliation works — Acas · accessed 13 October 2026
5. 5.Employment tribunal time limits — Acas · accessed 13 October 2026
6. 6.Plan to Make Work Pay and Employment Rights Act: timeline update — Department for Business and Trade (GOV.UK) · accessed 13 October 2026
7. 7.Employment Rights (Increase of Limits) Order 2026 — Employment Cases Update · accessed 13 October 2026
8. 8.Acas early conciliation time limits extended to 12 weeks — Farrer & Co · accessed 13 October 2026