Be prepared for the change in law regarding unfair dismissal

Travel Weekly has teamed up with leading industry employment lawyer Ami Naru for a regular column offering answers to readers’ legal questions on employment/HR matters. Ami covers the latest employment issues and responds to questions and dilemmas posed by you. In this column, she answers a question about changes to unfair dismissal laws.

Q. Our company is thinking of letting a member of staff go. What do we need to consider to ensure we act legally?

A. One of the first questions I normally ask an employer who is having issues with an employee is the length of service, as it is much easier to take action in the first two years. Currently, an employee must have two years of continuous service before they can bring an ordinary unfair dismissal claim. 

Once this milestone has passed, employers need to ensure they have a fair reason for dismissal and have followed a fair process, otherwise there is a real risk of an unfair dismissal claim.

However, when the rules change – from January 1, 2027 – the qualifying period will be reduced from two years to six months. This change forms part of the Employment Rights Act 2025. 

It is important for employers to be aware that if they are recruiting staff from July 2026 onwards, those employees will already have had six months’ service come January 1, and will therefore automatically acquire unfair dismissal protection. Those with less than six months’ service on January 1 will gain protection once they reach the six‑month mark.

Some claims are unaffected by the reforms. These are day‑one rights and require no qualifying service at all, including discrimination, whistleblowing and automatically unfair dismissal (eg health and safety reasons or trade union activity).

Currently, there is a cap on awards for unfair dismissal – whichever is the lower of either £118,223 or 52 weeks’ gross pay. But in another major change from January 1, the statutory cap on unfair dismissal compensation will be removed, meaning potential awards could be significantly higher, especially for senior or specialist employees. 

This will make compensation for unfair dismissal akin to discrimination claims, for which compensation is potentially unlimited. 

These are important changes that the travel industry should be aware of as travel employers often rely on seasonal and short‑term recruitment, have large intakes of staff ahead of peak periods and often reshape teams during demand fluctuations.

The move to six‑month protection means far more staff – including recent hires – will quickly gain the right to challenge dismissals. This increases legal risk for employers unless processes are tightened. Employers are encouraged to ensure early‑stage performance reviews are structured and clearly documented through strengthened probationary periods. 

Employers would also be wise to identify which employees will hit six months’ service by January 1, as well as to avoid delaying dismissal decisions until late 2026, as this will only cause employers difficulties down the line as protection thresholds will soon be much lower.

It is important to train those within your organisation who manage staff. Supervisors and managers in travel must understand the new rules and the importance of procedural fairness.

The fact employees will gain unfair dismissal rights after just six months, combined with the removal of the compensation cap, means employers must start preparing now to avoid disputes, strengthen internal processes and protect their organisations.