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Employment Update for Small Businesses
March 2026

Dear Subscriber

The Government has announced recently that the big change in unfair dismissal law will apply from 1st January 2027. That means that anyone joining you on or about 1st June 2026 will have the right not to be unfairly dismissed in the New Year. So employers need to be prepared to act swiftly to tackle performance or conduct issues for new starters, in this update we consider what practical steps to take.
Please contact me if you would like to find out a bit more about any of the subjects raised in this update or if you need any help or advice.

Please forward this email to any of your contacts who might find it of benefit.

Regards
Peter Etherington
Tel: 01664 668164
www.etherington.co.uk

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Peter Etherington
Unfair Dismissal Rights After 6 Months’ Service
Are you ready?
If you dismiss anyone this year, they will need two years’ continuous service to be able to claim ordinary unfair dismissal, but if you dismiss anyone on or after 1st January next year, they will only need 6 months’ employment to claim. This is a massive change and means that inductions and probationary periods are going to assume much more significance.

As an employer, we suggest there are three main areas for you to focus on as a consequence:

1. The Recruitment Process

You need to ensure you are confident that you have recruited the best person for the job and not rely too much on trial/probationary periods. That means having a robust process, starting with a clear job description and person specification from which you can develop a selection methodology.

Interviews have their place, as long as they are well structured to focus on the key competencies that you are looking for from a new recruit. But assessment and testing can also be powerful tools – it is all very well someone convincing you in an interview that they know what they are talking about, but by putting them through practical exercises and tests can help them demonstrate to you that it is not just hot air!

2. The Induction Process

By the time someone joins you, you will already have invested a lot in them. So it makes sense to do everything you can to set them up to succeed. That means looking after them from the off, making them feel welcome and part of the team, whilst also ensuring you are training them up and equipping them effectively to quickly learn the ropes.

It is a good idea to take time to put together a structured induction plan and timetable before they join you, involving their immediate line management and potentially colleagues, to ensure nothing is missed.

3. The Probation process

It is important to assess the performance of your new starter as part of a robust probation process. That means being clear from the start what your expectations are of their development (which may work in tandem with the induction process mentioned above), ensuring they know where they can find support and encouraging them to raise any problems or concerns at an early stage.

Holding regular reviews during probation is important so that you can pick up on any issues and take immediate steps to address them. If things aren’t going well and you consider they are not going to pass probation, you need to ensure that the termination of their employment is effective at least one week prior to the 6 month window. That is because when determining how much service someone has for unfair dismissal purposes, you have to allow for the statutory one week notice period, even if paying them in lieu of notice.

Please note, that the 6 month service requirement is for ordinary unfair dismissal. In some cases, employees can claim automatic unfair dismissal with no service requirement – e.g. if dismissal is due to their raising a health and safety concern, or for complaining of harassment, etc. Also, there is no service requirement for someone who wants to bring a discrimination claim.

National Minimum and Living Wage
National Living Wage and National Minimum Wage rates will increase on 1st April 2026 as follows:

  • from £12.21 to £12.71 per hour for workers aged 21 and over
  • from £10.00 to £10.85 per hour for workers aged 18 to 20
  • from £7.55 to £8.00 per hour for workers aged 16 and 17, and for apprentices under 19 and those over 19 in their first year*

*N.B. Apprentices over 19 and who have completed at least one year are entitled to the appropriate rate for their age

www.etherington.co.uk