If an employee is dismissed in the last week of their first six months with a payment in lieu of notice, will they still qualify to claim unfair dismissal?

The qualifying period for unfair dismissal decreases from two years to six months for dismissals with an effective date of termination on or after 1 January 2027.

When the reduced qualifying period is in force, an employee dismissed with a payment in lieu of notice in the last week of their first six months will gain unfair dismissal rights.

The qualifying period for unfair dismissal is measured up to the effective date of termination. Where the employee is dismissed without notice, the effective date of termination is the day on which the termination “takes effect”. Where the employee is dismissed with notice, the effective date of termination is the day on which the notice expires.

All employees, however, are entitled to a minimum statutory period of notice after they have worked for the employer for at least one month. For the first two years of their employment that minimum period is one week. (The minimum period of notice does not apply if the employee is guilty of gross misconduct.)

For the purposes of qualifying for unfair dismissal, that minimum notice of one week is included in the overall period of employment (s.97(2) of the Employment Rights Act 1996). So, if an employee is dismissed without notice, their effective date of termination is extended to the end of the one week’s notice that they should have been given. This is still the case if the employer has made a payment in lieu of notice.

This means that, where the effective date of termination is on or after 1 January 2027, an employer cannot safely wait until the final week of a six-month probation period to dismiss the employee without them qualifying for unfair dismissal protection. A payment in lieu of notice will make no difference.

Employers should note that this rule only applies to the one week’s statutory notice. A longer contractual notice period will not be added to the continuous period of employment if the employee is dismissed without notice.