This is the second article in a three-part series on the reduction of the unfair dismissal qualifying period from two years to six months. Part 1 covered the change itself and how to rebuild your probation policy around it. Part 2 covers what happens after probation ends: the process a dismissal has to survive once your employee has the right to challenge it. Part 3 will follow.
The gate closes, and then what
Part 1 dealt with the front line. Get probation right, decide before month five, document everything, and you keep the assessment window the two-year rule used to give you for free.
But probation only buys you five months. Everyone you keep past that point is, from 1 January 2027, someone who can take you to a tribunal if you dismiss them and they think it was unfair. Not just the long servers. Everyone.
So the question stops being "can they claim" and becomes "would our process stand up". For most SMEs, that is a question nobody has had to answer before.
Being right is not the same as being fair
This is the single most useful thing to understand about unfair dismissal, and it surprises people every time. There is a whole legal mechanism built around it: where a tribunal finds a dismissal procedurally unfair but accepts the employee would have been dismissed anyway, it can reduce the compensation, in some cases to nothing. The finding of unfair dismissal stands either way.
Tribunals are not there to decide whether you were right. They decide whether your decision fell within the range of responses a reasonable employer might have taken, and whether you got there by a fair process. An employer can be completely correct about the underlying problem and still lose, because of how the decision was reached.
That cuts both ways. It means a genuinely difficult employee can win a claim over a botched meeting. It also means a well-run process protects you even where the decision is finely balanced.
The five potentially fair reasons
Every dismissal has to fit one of five statutory reasons. Get this wrong at the start and the rest of the process cannot save it.
- Conduct. What the employee did. Lateness, dishonesty, refusing a reasonable instruction, behaviour towards colleagues.
- Capability or qualifications. What the employee can do. Performance that falls short, or ill health that prevents them doing the job.
- Redundancy. The job is going, or fewer people are needed to do it.
- Statutory restriction. Continuing to employ them would break the law. A driver losing their licence is the classic example.
- Some other substantial reason. The catch-all, used for genuine business reorganisations and irretrievable breakdowns in working relationships. It is narrower than employers assume and should never be a first resort.
Two of these are fair reasons in name only. Redundancy still needs a genuine redundancy situation, fair selection and proper consultation. Some other substantial reason still needs the reason to be substantial and the process to be fair.
Conduct and capability are not interchangeable
The most common structural error we see is running a capability issue through a disciplinary process, or a conduct issue through a performance improvement plan.
Conduct is about choice. The employee could have done otherwise and did not. It goes through a disciplinary process: investigation, disciplinary hearing, warning or dismissal, appeal.
Capability is about ability. The employee is trying and falling short, or cannot do the job for health reasons. It goes through a performance or ill-health process: standards made clear, support and training offered, reasonable time to improve, review, and only then a capability hearing.
Putting a struggling employee through a disciplinary is one of the fastest routes to an unfair dismissal finding, because the process on paper does not match the reason given. A tribunal reads both and sees the mismatch immediately.
The ACAS Code and the 25% uplift
The ACAS Code of Practice on Disciplinary and Grievance Procedures is not law, and failing to follow it does not by itself make you liable. But employment tribunals must take the Code into account in relevant cases, and where an employer unreasonably fails to follow it, a tribunal may increase compensation by up to 25 per cent.
Read that again with the January change in mind. From 1 January 2027 there is no cap on the compensatory award. A 25 per cent uplift on an uncapped award is a very different proposition from 25 per cent of a figure that stops at £123,543.
The uplift is not reserved for outrageous cases. In Slade and another v Biggs and others the Employment Appeal Tribunal upheld a 25 per cent uplift and endorsed a four-stage approach to deciding the level: whether an uplift is just and equitable, what percentage is warranted, whether it double-counts against other awards, and a final sense check on the absolute sum.
One common misreading is worth clearing up. The Code does not apply to redundancy dismissals or to fixed-term contracts that simply expire, and the draft keeps that exclusion. But a redundancy that is not genuine, or a grievance raised during a redundancy process and then mishandled, brings the Code back into play. "It was a redundancy" is not a shield.
The Code's core requirements are not complicated:
- Investigate before you decide, and keep investigation separate from the decision where you have the people to do it
- Put the allegations to the employee in writing, with the evidence you are relying on
- Give reasonable notice of the meeting and let them prepare
- Allow them to be accompanied by a colleague or trade union representative
- Let them state their case and respond to the evidence
- Decide, and tell them the outcome in writing with reasons
- Offer a right of appeal, heard by someone who was not involved in the original decision
Most SME failures are in the gaps rather than the substance. No written allegations. No proper investigation. The same manager investigating, deciding and hearing the appeal. An outcome delivered verbally and never confirmed. Each one is a separate opportunity for an uplift.
ACAS is rewriting the Code right now
On 30 July 2026, ACAS opened a consultation on a substantially revised draft of the Code. It is the first full revision since 2009, and it is open for responses until 23 September 2026.
The current Code stays in force until the revised version is approved by government, laid before Parliament and given an implementation date. None of that has happened yet, and ACAS has not indicated when it expects the new Code to take effect.
Two proposed changes are worth knowing about now.
Informal resolution moves into the Code itself. At present, the expectation that employers try to resolve matters informally sits in the Foreword, outside the statutory text. The draft brings it into the Code proper, giving early informal action a more prominent role before a formal process begins. That will not be appropriate in every case, but it raises the bar on jumping straight to a disciplinary.
Longer postponements where a companion is unavailable. The draft codifies the position from Talon Engineering Ltd v Smith (2018): it may be reasonable to allow more than the statutory five working days for a rearranged meeting, particularly where dismissal is a possible outcome. Refusing a reasonable postponement can make a dismissal unfair on its own.
The practical point for employers is not to wait. A procedure that depends on individual manager judgement rather than a documented process will struggle under either version of the Code. If yours does, that is worth fixing before the revision lands, not after.
What a defensible dismissal looks like
Strip away the legal framing and a dismissal that survives scrutiny has six things behind it.
- A reason that fits one of the five, identified at the start. Not decided retrospectively when the claim arrives.
- An investigation proportionate to the allegation. Not every case needs a formal investigation meeting, but every case needs the employer to have found out what happened before deciding what to do about it.
- Written allegations and disclosed evidence. The employee cannot answer a case they have not seen.
- A meeting where they were genuinely heard. Not a meeting where the outcome letter was already drafted.
- A decision a reasonable employer could have reached, with consistent treatment of comparable cases. Dismissing one person for something you overlooked in another is a straightforward route to a finding of unfairness.
- An appeal, heard by someone who was not involved in the original decision wherever possible. The right of appeal itself is not optional. Independence is qualified by what is practicable, and tribunals take employer size into account, but a small business that always has the same person deciding and hearing the appeal is inviting the point to be taken. An external HR professional can fill the gap.
The record is the defence
A tribunal hearing typically takes place many months after the events. Memory is not evidence. What survives is what was written down at the time.
That means the case file has to exist as the process runs, not be assembled afterwards. Meeting notes with attendees and dates. The evidence pack that was actually disclosed. The invitation letters. The outcome letter and its reasons. The appeal and its outcome. Assembled retrospectively, it looks exactly like what it is.
Access matters too. An investigating officer needs the case they are investigating and nothing else. An appeal chair needs to come to it clean. Where everything lives in one shared mailbox or folder, that separation is impossible to demonstrate.
This is the part Trident Command was built around. Cases are logged and numbered from the moment they open, meetings are recorded with attendees and dates, evidence is attached to the case rather than an inbox, and access is granted per case so an investigator or appeal chair sees their file and nothing more. Outcome letters are drafted from the document library and reviewed before issue, never auto-sent.
What to do before January
- Check your disciplinary and capability policies are separate documents with separate processes. If you have one policy covering both, that is the first thing to fix.
- Confirm your disciplinary policy gives examples of gross misconduct. The draft Code makes this expectation explicit, and it protects you when you rely on it.
- Identify who hears appeals. If the answer is "the same person who made the decision", you need an alternative before you need it in anger.
- Brief your managers on conduct versus capability. Most process failures start with the wrong route being chosen in week one.
- Audit an old case file. Pick a disciplinary from the last year and ask whether it would stand up as a bundle. If the notes are in someone's notebook and the outcome was given verbally, you have your answer.
- Consider responding to the ACAS consultation before 23 September if the proposed changes affect how you operate.
Coming in Part 3: the compensation cap comes off on 1 January 2027. What uncapped actually means in practice, how tribunals assess loss, and what it does to settlement conversations, protected conversations and settlement agreements.
Get the reform-ready pack — our Probation Policy template built for the six-month qualifying period, plus the manager's one-pager on running probation properly. Get the pack — free, sent to your inbox
Need help preparing for January 2027? Get in touch at info@tridenthr.co.uk or visit www.tridenthr.co.uk.