If there’s one thing we can say with confidence at Tower HR, it’s that HR never stands still. Just as businesses get comfortable with the rules, change is on the horizon again — and the upcoming Employment Rights Bill is set to be a big one.
One of the most significant changes for employers is now confirmed:
From January 2027, the qualifying period for protection from unfair dismissal will reduce from two years to just six months’ service.
For many businesses, this is a major shift.
What is the “2-year rule” — and why has it mattered?
Up until now, employers have had a limited but important level of flexibility when managing employees with less than two years’ continuous service.
In most cases, if someone wasn’t the right fit — perhaps due to performance, attitude, or ongoing issues — employers could end employment by giving notice and paying contractual entitlements, without needing to follow a full dismissal process (as long as discrimination wasn’t a factor).
This often crops up when managers say things like:
- “They’re not performing”
- “Their attitude is poor”
- “They’ve been trouble since day one”
The crucial follow-up question has always been: how long have they worked here?
Once that answer passes the two-year mark, things become far more complex.
Why length of service still matters — but much sooner
Currently, once an employee reaches two years’ service, they gain the right to claim unfair dismissal. At that point, employers generally have three realistic options:
- Formal performance or disciplinary processes
- Genuine redundancy or restructuring
- Settlement agreements, which can be effective but costly
This is why we’ve always advised employers to review staff well before the two-year point.
However, from January 2027, that review point comes much earlier.
What’s changing under the Employment Rights Bill?
Under the confirmed proposals, employees will gain protection from unfair dismissal after just six months’ service, rather than two years.
That means:
- The window for making a clean, low-risk exit is significantly shorter
- Performance and conduct issues must be addressed early
- Letting problems “drift” is far more risky
- Managers will need to be confident having difficult conversations sooner
While discrimination protection has always applied from day one, unfair dismissal claims will now be in scope far earlier than many employers are used to.
What should employers be doing now?
Although January 2027 may feel some way off, businesses that prepare early will be in a much stronger position.
Key steps to consider:
- Review probation periods — are they meaningful and actively managed?
- Train managers to address performance and behaviour issues early
- Ensure clear documentation from the first few months of employment
- Update contracts, policies and procedures in line with the new rules
For businesses that have historically relied on the two-year threshold as a safety net, this change will require a mindset shift — but with the right HR support, it’s very manageable.
Need support?
If you’d like to understand how the Employment Rights Bill will affect your business, or you want help tightening up your probation and performance processes ahead of 2027, Tower HR is here to help.
Book your free HR Peace of Mind Call and make sure your business is ready well before the rules change. Call our friendly team on 07598 050 705 / 07740 996 336