Employment Rights Act: unfair dismissal rights will apply to all new recruits from 1 July 2026
New laws giving employees unfair dismissal rights after six months of service mean staff recruited from 1st July 2026 onwards will have greater job protection. RSM UK is reminding employers to ensure contracts of employment for new starters are updated and managers are fully trained in the new law, which will apply to all those with six months or more service from 1 January 2027.
Recent research from RSM UK suggests the new laws could potentially lead to higher unemployment. RSM’s Workforce Surveyfound almost half (44%) of employers will be more cautious when recruiting due to the new unfair dismissal rules, which reduces the time from which employees can claim unfair dismissal to just six months’ service instead of two years. Around a third of businesses (34%) said they would use more off-payroll workers and contractors as a result, while almost a fifth (19%) said they will temporarily freeze recruitment.
Charlie Barnes, Head of Employment Legal Services at RSM UK said: “Many businesses may not realise that the new unfair dismissal rights coming in from 1 January 2027 will apply immediately. This means any employees recruited from July 1 this year will be able to claim unfair dismissal after six months of service. Our recent Workforce survey suggests that many employers may be put off recruiting as a result, and there may be unintended consequences leading to increased levels of unemployment.
“We’re recommending businesses get ready for the change by ensuring contractual probationary periods do not exceed five months, that probationary review processes are reinforced, and line managers are retrained on good performance management procedure.”
The new rules could also put further pressure on the employment tribunal service, which is already facing a 5-year backlog. RSM’s research found quarter of employers felt an increase in tribunal claims was ‘very likely’ while 40% think it is ‘somewhat likely’.
Charlie Barnes concludes: “The employment tribunal service is already struggling, and the change in unfair dismissal rules could push it closer to breaking point. We’d like to see a complete overhaul of the current system, so that employers and employees can gain swift access to justice.”