Changes to unfair dismissal protection: Why is dispute prevention so important?

7 September 2026

One of the key policies introduced in the Employment Rights Act 2025 (ERA) significantly reduces the qualifying period for legal protection against unfair dismissal.

While much focus has been placed on updating employment law to manage probation periods and workplace policy, it is best to consider how a dispute would work under the new rules.

To avoid being faced with an unlimited compensation claim, you need to know how to gather evidence  and provide a robust defence to manage a dismissal dispute.

How will unfair dismissal disputes work under the new rules?

Unfair dismissal is where an employee is dismissed in breach of their statutory rights and it is vital that employers can demonstrate that no breach took place.

From 1 January 2027, all employees are entitled to protection from unfair dismissal after six months of employment.

Where unfair dismissal compensation is currently the lower of £123,543 or 52 weeks’ pay, the monetary cap on tribunal compensation will be removed.

This doesn’t automatically mean substantial compensation rewards will be won in every single case, as compensation still must be ‘just and equitable’.

How can employers reduce the risk of a dispute?

Unfortunately, there is no guaranteed way to avoid all unfair dismissal claims.

However, there are steps employers can take to make their dismissal decisions defensible when disputed by a former employee.

As a place to start, the Advisory, Conciliation and Arbitration Service (ACAS) provides a Disciplinary and Grievance code of practice.

This guide helps employers dismiss staff using a fair, consistent and legally compliant approach, which can reduce tribunal compensation claims by up to 25 per cent.

Where dismissal do occur, it is necessary to have a robust pool or evidence to support the decision and a consistent logic behind the dismissal.

This might mean keeping records of any grievances that the employee may have had with clients and customers, highlighting the way in which their continued employment could have been a liability to the business.

Working with HR teams, it should be possible to demonstrate the opportunities that the employee had to improve their work.

Where these attempts were ignored or unsuccessful, it is worth documenting this as it can demonstrate the dismissal was not unfair.

Any violations of company policy will also be worth recording these to demonstrate the repeated ways in which the employee showed they were not fit for the role.

Speak to a member of the Litigation and Dispute Resolution Team

In any instance a dismissal beyond the six-month safe period is being considered, it is worth speaking to a legal adviser first.

If there are additional factors, such as long service, protected characteristics or whistleblowing concerns, legal guidance can help you stay protected.

Our solicitors can review dismissal decisions before they are made to identify any weaknesses in logic or evidence that could later be challenged.

Where disputes have escalated to an Employment Tribunal, we can represent the interests of your company and negotiate settlements where necessary.

As the upcoming changes widen the scope of protection and raise the stakes of compensation claims, legal care needs to be taken to avoid a potential dispute.

Are you planning on dismissing an employee, or is a claim being made against your business? Get in contact with our experts to discuss your options.