Small businesses that dismiss an employee without the right reason, process and paperwork could soon be facing tribunal awards with no upper limit.
A major change to employment law is taking effect in January 2027, but it impacts business owners now.
Local HR consultant, Tara, is urging business owners across England to take dismissal seriously.
Tribunal claims are already up 54% year on year. One employer recently paid £66,295 plus costs after a dismissal that felt justified at the time.
From January 2027, the cap on compensation awards is being removed entirely. And the Fair Work Agency now has the power to audit employer records without waiting for a worker to make a complaint.
Tara, who runs ZEST HR in Hampshire, said: “Most dismissals that go wrong do not go wrong because the employer was unreasonable. They go wrong because the process was rushed, the documentation was thin or there was a protected disclosure in the background that nobody noticed.”
“A protected disclosure is when an employee has raised a concern, maybe about safety, about a legal breach, about something they believed was wrong. If you dismiss that person, or if your decision looks connected to what they raised, you can face an uncapped award. I see employers completely blindsided by this.”
Tara says that the basics of a safe dismissal are well established but consistently overlooked by smaller businesses under pressure.
“You need a fair reason, a fair process and clear documentation. That means a genuine investigation, a proper hearing, the right to appeal and a written record of every stage. If any of that is missing, you are exposed.”
To carry out a safe dismissal, Tara advises business owners to check the following before taking any action:
- Is the reason for dismissal genuinely fair and clearly documented?
- Has a proper investigation been carried out and recorded?
- Has the employee been given the chance to respond formally?
- Is there any history of protected disclosures that could complicate the decision?
- Has the right to appeal been offered in writing?
“The January 2027 changes are not something to prepare for in December 2026”, Tara said. “If you have someone in your business right now who you think may need to leave, or if your dismissal process has never been properly reviewed, now is the time to sort it.”
Tara is available for a confidential conversation with business owners dealing with a current dismissal situation or wanting to understand what a compliant process looks like.
To get in touch, visit zesthr.co.uk
ZEST HR Experts was established over 20 years ago and works with small businesses across Hampshire, providing practical HR advice, compliance support and proactive people management.
END
Note to editor: Tara Anstee is available for further information and interviews on +44 7983 936747