This guide provides managers with information on what happens when the decision is made to dismiss a member of their team and how to avoid mistakes that could lead to claims against their organisation
There are times when it’s necessary to terminate an employee’s contract and when that happens, you will need to work with your HR adviser and follow your employer’s dismissal process.
This process should set out the steps that need to be taken to terminate their contract in a fair, legal and reasonable way.
This guide is designed to help understand the dismissal process. How you respond as a manager could protect your organisation from having an Employment Tribunal (ET) claim, for example, for unfair dismissal or discrimination or any other claim for compensation by the affected employee. Your fair and appropriate handling of the situation is also important for the motivation and wellbeing of the rest of your team when a colleague is dismissed.
Under the Employment Rights Act 2025 (ERA 2025), from 1 January 2027, the two-year unfair dismissal qualifying period will be reduced so that employees can claim unfair dismissal after just six months' service. The cap on compensatory awards will also be removed allowing tribunals to award uncapped levels of compensation in unfair dismissal claims.
These changes mean that new hires recruited on or after 1 July 2026 will be able to claim unfair dismissal after only six months' service. Employees with a start date after 1 January 2025 will also be able to claim unfair dismissal earlier than they would otherwise have been, from 1 January 2027.
Anyone bringing a claim before 1 January 2027 must still have two years' qualifying service.
Keep up to date with the latest on these changes with our ERA 2025 Tracker of law changes.
It is important to remember that there are situations where an employee can claim unfair dismissal without any qualifying service. This will remain the case after 1 January 2027. These cases of 'automatically unfair dismissal' arise, for example, if someone is dismissed because they are pregnant, have made a 'protected disclosure' under whistleblowing rules, or are dismissed because of their trade union activities.
An employee can bring an unfair dismissal claim where they have resigned (rather than when the employer has actively dismissed them), if the employee can show that the employer's behaviour was in breach of contract - usually a breach of the implied term of mutual trust and confidence - and that the employee resigned because of that breach. This is known as a 'constructive dismissal'.
Employees may also be able to claim 'wrongful' dismissal from the start of their employment, even if they do not have the required period of service to bring an unfair dismissal claim. A wrongful dismissal occurs when an employee is dismissed in a way that breaches their contract - for example, they are not given the correct notice period.
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