Brief summary of a long problem – stakeholder feedback on unfair dismissal changes

Kevin McKenna, Partner

On 28^th May the Department of Business and Trade issued its summary of feedback from a series of roundtables which took place in January and February 2026 in relation to the unfair dismissal changes which will come into force on 1^st January 2027.  It’s short. Given the potential impact of the changes, it’s remarkably short. But what were the concerns? In essence there were four points.

1. The participants acknowledged that the value of most claims currently falls well below the existing cap, and it was confirmed that the changes will not change the method for calculating awards.
2. There was concern about how the removal of the cap could impact business decisions, including basing operations within the UK and hiring decisions, particularly for employers that recruit into highly-paid roles. It was suggested that guidance on how to manage performance and dismissal in executive roles would be helpful.
3. Participants sought clarity on how awards would be calculated. It was understood that the current method for calculating awards would not be changed. However, it was suggested that, particularly for executive roles, it would be helpful to have further guidance that could support employment tribunals, employers, and employees to understand how the changes could affect calculation.
4. The potential for the changes to increase burdens on the employment tribunal system were discussed and concerns about capacity and capability were raised. Reforms to the Dispute Resolution System and further guidance and support for the employment tribunal were seen as important for implementing these changes.

The concerns are rational, but how much comfort can be had from the first point – that currently most claims fall well below the existing compensatory award cap, which is £123,543. That is doubtless true. Very high earners often do not see the tribunal as a forum for them. It has not been worth the outlay if they can only recover a fraction of their true loss. The more realistic likelihood is that tribunals will now see a new type of claimant, one with resources and complex benefits packages. With higher value will come higher complexity, and that will lead to longer hearings.

This isn’t the only new brand of claimant. Recent months have seen the rise of the AI-assisted claimant who is generally more likely to produce more documents, longer documents and documents with greater complexity, all drafted with the assistance of an AI partner eager to please. That too is leading to more claims, with more complexity, longer documents and often unrealistic expectations of compensation. That will all lead to longer hearings.

The reduction of the qualifying period to six months alone will protect an additional 6.3 million employees from unfair dismissal, will generate an additional 9,000 ACAS early conciliation referrals and lead to 3,000 more tribunal claims.

Marry this with the legitimate concern about the increased burden on employment tribunals that already exists and the problem magnifies. The extended limitation period to start the process of a claim changes in October this year from three months to six months. It must follow that more claims will be viable and “in time”.

As an adviser, I fear that the new wave of claims will be bigger. They will be worth more and be more complicated. They will be listed for hearing four years on from the events under examination, when the witnesses, managers and decision-makers may all have moved on. So, if you think you might have a high value case before an employment tribunal in 2030, get your lawyer to take a first draft of your witness statement now, while you can still remember what happened.

If you have any queries on this subject, please get in touch with our employment team at [email protected].