From 1 January 2027, your fixed-term employees will be able to claim unfair dismissal after just six months. It is a change that could catch out even the most careful employer. Here is what you need to have on your radar.
What is changing?
The Employment Rights Act 2025 cuts the qualifying period for unfair dismissal from two years to six months, and removes the cap on compensation. It also reaches your existing team. Anyone already with you for six months will be protected the moment the change lands.
Why should fixed-term contracts be on your radar?
Most employers see a fixed-term contract as ending naturally. The law sees it differently. Letting one run out without renewing it counts as a dismissal. Until now, that rarely mattered, because most contracts ended long before the two-year mark. From January, that nine-month maternity cover or one-year project role could become a tribunal claim.
Is an end date enough to protect you?
In short, no. Once someone has six months’ service, a tribunal will want to know why the contract was not renewed and how you reached that decision. Is your reason one the law recognises? Could you show you followed a fair process? If you are unsure of either answer, now is the time to review and get advice on how to proceed.
Could ending a contract early keep you safe?
It is tempting to think so. But counting service is not always as simple as it looks. The way notice, start dates and repeated renewals are treated can push someone over the line without employers realising. Employees also have longer to bring a claim from 1 October 2026, so a decision made today could come back to you much later.
What about your probation periods in relation to Fixed term contracts?
The same pressure applies here. If your probation period runs for six months, you may have far less time to make a decision than you think.
What stays the same for fixed term contracts?
Not everything is moving. Some service-related rights keep their existing thresholds, and fixed-term employees still have the right to be treated no less favourably than your permanent team. Knowing which rules have changed, and which have not, is key to getting this right.
What should employers and operational decision makers be doing now?
With the new rules in force from 1 January 2027, the businesses that fare best will be the ones that act early. Do you know which of your fixed-term employees will pass six months’ service once they apply? Are your contracts, probation process and managers ready? If you are not sure, that is the place to start.
How can HRCentral help?
This is exactly the kind of change we help our clients get ahead of. We will review your fixed-term contracts and probation process, identify where the risks sit, and give you a clear, practical plan for every contract coming to an end.
We charge by the hour, with no retainers, so you only pay for the support you use. Where a situation needs legal advice, we work alongside our long-standing employment law partners.
If you would like to talk through what the new rules mean for your fixed-term staff, get in touch with the team.
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