This Practice Note considers the legal and practical implications of the changes made from 1 January 2027 by section 25 of the Employment Rights Act 2025 (ERA 2025) and ERA 2025, Sch 3 to unfair dismissal under the Employment Rights Act 1996 (ERA 1996), namely: • the reduction of the qualifying period for ordinary unfair dismissal from two years to six months, and • the removal of the statutory cap on the compensatory award In particular, this Practice Note considers the potential impact of these changes on: • employers’ dismissal processes and risk assessments • valuing potential claims for settlement purposes • claims brought by higher earners and employees with bonuses, commission, high-value pensions, share options, long-term incentive plans (LTIPs) or other incentive arrangements, and • the pleading and settlement of related claims, including discrimination and protected disclosure (whistleblowing) claims For information on the implications of the changes for probationary periods, see Practice Note: Probationary periods. This Practice Note is not intended to provide a full explanation