Unfair Dismissal Changes From January 2027: What Nanny Employers Need To Know

From 1 January 2027, a nanny will be able to claim unfair dismissal after six months in the job instead of two years. If you employ a nanny, that changes how you handle probation, performance and ending a contract. This isn’t legal advice, but here is what is changing and how to get ready.

What is changing and when?

The Employment Rights Act 2025 reduces the qualifying period for ordinary unfair dismissal claims from two years to six months. The change takes effect on 1 January 2027.

In practice, that means:

• A nanny who started on or before 1 July 2026 will have six months’ service by the end of the year, so they are protected from 1 January 2027.
• A nanny who starts after 1 July 2026 becomes protected once they reach six months’ service.

The government originally planned a day-one right to claim, but that was dropped as part of a compromise, and so was the idea of a statutory probation period.

The compensation cap is going too

At the same time, the limit on compensation for ordinary unfair dismissal is being removed. Until now, awards have been capped at the lower of 52 weeks’ pay or a statutory limit (currently £118,223). From 1 January 2027 there is no cap.

For a household employer, the sensible takeaway is that the process you follow when ending a nanny’s employment matters more than ever.

What counts as a fair reason to dismiss?

Once your nanny has the right to claim, a dismissal needs to be for one of five potentially fair reasons, and you need to follow a fair process:

• Conduct
• Capability or performance
• Redundancy
• A legal restriction, such as losing the right to work
• Some other substantial reason

Some protections have never needed any qualifying period. Dismissal because of pregnancy, or discrimination, is unlawful from day one. Our guide on what happens when your nanny becomes pregnant covers that side of things.

What it means for your nanny’s probation

A probation period doesn’t pause these rights. From 1 January 2027, a nanny with six months’ service has unfair dismissal protection whether or not they are still on probation.

If you have concerns about a new nanny, it is far better to raise them early. Many employment lawyers suggest formal reviews at around three months and again at around five months, so any problems are discussed and recorded well before the six month mark.

Situations nanny employers commonly face

The children start school or need fewer hours. Redundancy can be a fair reason when your need for a nanny genuinely reduces, but it still needs a fair process. That means explaining the situation, listening to your nanny and considering alternatives such as reduced hours before you decide.

The relationship isn’t working. A breakdown in trust or a poor fit can be a fair reason, but it should be backed by clear discussions and notes rather than a sudden decision.

Ending a contract just before six months. This won’t reliably avoid the new rules. The statutory notice period can count towards length of service, so a nanny dismissed a few days short of six months may still qualify.

How to get ready

• Check your nanny’s contract for the notice period, probation terms and a clear job description. Our guide to your nanny’s employment contract explains what should be in it.
• Keep brief written notes of any concerns and the conversations you have about them.
• Raise problems early and in writing, and give your nanny a chance to respond and improve.
• Follow the Acas Code of Practice on disciplinary and grievance procedures.
• Take advice before you dismiss anyone. For a wider overview, read employment law: what every employer should know.

Unfair dismissal 2027: quick answers

When do the new unfair dismissal rules start?

On 1 January 2027. The qualifying period for an unfair dismissal claim drops from two years to six months.

Who is protected from the first day of the change?

Employees who have at least six months’ continuous service on 1 January 2027, which means anyone who started on or before 1 July 2026.

Is there still a cap on compensation?

Not for ordinary unfair dismissal from 1 January 2027. The cap is being removed.

Does this apply to nannies?

Yes. A nanny working in your home is an employee, and employees get unfair dismissal rights in the same way as anyone else.

Can I still dismiss a nanny during probation?

You can, but from 1 January 2027 a nanny with six months’ service can challenge it as unfair even if they are still on probation, so you will need a fair reason and a fair process.

Need a second opinion before you act?

If you’re thinking about ending a nanny’s employment, or you’d like to check your contract is ready for the new rules, our clients can ask our team at any time, as unlimited employment advice is included in the annual fee. Register today or get in touch and we’ll talk it through.