Unlimited Unfair Dismissal Compensation - What It Means for Your Business

Getting a dismissal wrong could become a much more expensive mistake for employers from January 2027.

Currently, compensation for unfair dismissal is subject to a statutory cap of £123,543 or 52 weeks' gross pay, whichever is lower. From 1 January 2027, that cap is being removed, meaning there will no longer be a statutory limit on the compensatory award a tribunal can make.

For small businesses, this makes getting your people processes right more important than ever.

Our free guide explains what the changes mean for your business, who is protected and, most importantly, what you should be doing now to reduce the risk of getting things wrong.

Inside the guide, we cover:

✅ What's changing? An explanation of the removal of the unfair dismissal compensation cap and the reduction in the qualifying service period from two years to six months.

✅ What counts as unfair dismissal? Why having a potentially fair reason for dismissal isn't enough if you haven't followed a fair process.

✅ Who is protected from day one? Understanding that some employment protections, including certain automatically unfair dismissal and discrimination protections, apply from the start of employment.

✅ Five practical steps to protect your business From raising problems early and keeping proper records to training managers and reviewing your contracts, policies and probation processes.

✅ When to get HR advice Why seeking advice before making a dismissal decision is far better than trying to put things right afterwards.

The removal of the compensation cap doesn't mean you need to completely change how you manage your employees. But it does mean the financial consequences of getting things wrong could be considerably greater.

A little preparation now could save you a lot of time, money and stress further down the line.

Download your free guide and make sure your business is prepared for the changes ahead.