By Jai Garcha – Head of Legal at Hamilton Barnes | Employment law for UK Businesses...

The UK employment tribunal system is now busier than at any point on record. For a recruitment business like ours, and for every client we place candidates with, that backlog isn't just an administrative headache. It's the backdrop against which the biggest overhaul of employment law in a generation is about to land, and the two trends look set to feed each other.

The numbers behind the headlines

 It's easy to assume tribunal claims are a niche concern. The latest official statistics say otherwise. The Ministry of Justice's recent quarterly figures, covering January to March 2026, show the tribunal system straining under an unprecedented caseload

• 531,000 open tribunal claims at the start of 2026 (a record high)
• 55% year-on-year rise in single claims lodged in Q1 2026
• 39% annual increase in single claims across 2025/26, while disposals fell 12%

The pattern isn't a one-off spike. Claims have climbed for several consecutive quarters: single claims were already up 33% year-on-year in the July-to-September 2025, and the backlog had reached around 523,000 by the end of that year, before rising again to 531,000 in early 2026. Disposals, meanwhile, are falling further behind, which means the queue keeps growing even where the rate of new claims levels off. Some commentators report tribunal hearings now being listed as far out as 2029 or 2030.

Why claims keep climbing

Several factors are pushing the numbers up at once. Employees are more aware of their rights than they were even a few years ago, helped by extensive media coverage of the Employment Rights Act 2025 as it moved through Parliament. Cost pressures on both sides mean fewer disputes get resolved informally before they reach a tribunal. The backlog itself becomes self-reinforcing: as cases sit unresolved for longer, the pool of open claims simply keeps expanding, even in quarters where new claims level off.

Against that backdrop, the Employment Rights Act 2025 doesn't arrive in unstrained system, it is already running at near-maximum capacity. That timing matters, because several of the Act's central reforms are precisely the kind that tend to generate more claims, not fewer.

Three changes that could add fuel to the fire

1. A far larger pool of eligible claimants

Right now, an employee needs two years' continuous service before they can bring an unfair dismissal claim. From 1 January 2027, that qualifying period falls to just six months. Given that the reduced period applies to existing staff as well as new starters, anyone employed on or before 1 July 2026 will already have banked six months' service by 31 December 2026, meaning they step straight into full protection the day the new law takes effect under the final legislation, with no waiting period left to run.

2. No cap on what a tribunal can award

Unfair dismissal compensation is currently capped at the lower of 52 weeks' gross pay or a statutory maximum (£123,543 from 6 April 2026). From 1 January 2027, that cap disappears entirely, and awards will be based solely on the employee's actual financial loss, bringing unfair dismissal in line with discrimination and whistleblowing claims, which are already uncapped. Most awards are modest in practice (the recent average sits at around £14,000), so this change will be felt hardest in higher-earning or senior cases where a dismissal leads to prolonged unemployment. Some commentators note that average awards may not shift dramatically overall, since claimants must still mitigate their losses and tribunals can still reduce awards for contributory fault. However, removing a cap also removes a natural ceiling on what a claimant has to gain by pursuing a case all the way to a hearing rather than settling early, and it is already expected to drive more claims and higher settlement values, among senior and higher-paid employees.

3. More time to decide whether to claim

The government has also confirmed plans to extend the standard time limit, as confirmed by SE Solicitors, for bringing most tribunal claims from three months to six months, expected to take effect from 1 October 2026. A longer window gives employees more time to seek advice, gather evidence, and weigh up whether to proceed. This will mean more claims are ultimately lodged, not fewer, even before the backlog is contemplated.

Reading the two trends together

 None of this happens in isolation. A record backlog means every new claim added to the system waits longer to be heard. A larger pool of eligible employees means more people are entitled to add a claim in the first place. And an uncapped ceiling on compensation changes the calculation for anyone deciding whether a claim is worth pursuing. Put together, the reasonable expectation across the legal commentary is not just more claims, but higher-value and slower-moving claims arriving in a system that is already struggling to keep pace.

What this means for Hamilton Barnes and our clients

• Get your own house in order first: review contracts, offer letters, and staff handbooks well ahead of 1 January 2027 - not after it.
• Encourage clients to revisit probation structures: many employers are shortening probation periods to around three months so that performance can be properly assessed and, if needed, acted on before six months' service accrues.
• Push documentation, not just decisions: clients should be documenting performance concerns and decisions properly from day one, since thin paper trails become far riskier once compensation is uncapped.
• Flag the 1 July 2026 cut-off specifically: clients hiring on or around 1 July 2026 should understand exactly where their new starters will sit relative to the qualifying-service milestone, and plan accordingly.
• Set expectations on timelines: a claim that reaches a hearing today may not be resolved for two to three years, so early, well-documented decision-making now reduces exposure that could otherwise sit on a client's books for years to come.

The direction of travel is clear enough that waiting for 1 January 2027 to act is no longer a sensible strategy for us or for our clients. 

The businesses that come out of this reform cycle in the best position will be the ones treating the run-up - starting now - as the real deadline.

FAQ's

Will there still be a cap on unfair dismissal compensation?

• No. The compensatory cap, currently the lower of 52 weeks' gross pay or a set statutory maximum, is being removed entirely, so tribunals will base awards solely on the claimant's actual financial loss, subject to the usual duty to mitigate. This brings ordinary unfair dismissal in line with discrimination and whistleblowing claims, which have long been uncapped.

What should employers do differently under the new regime?

•  Acas and employment law firms are converging on broadly the same advice: manage probationary periods properly, address performance or conduct concerns early rather than letting them drift, follow the Acas Code of Practice on disciplinary and grievance procedures, and keep a clear, contemporaneous paper trail through any investigation or disciplinary process. None of this is new good practice, but it becomes considerably higher-stakes once compensation is uncapped and far more employees qualify to claim.

Where can I find official, up-to-date guidance on these changes?

•  Acas maintains a dedicated, regularly updated page tracking the Employment Rights Act 2025 as it moves through implementation, and the underlying tribunal statistics are published quarterly by the Ministry of Justice on GOV.UK. Both are good first stops before relying on any commentary, including this article.

Sources

The sources below informed this article and are linked throughout the text where referenced.

• GOV.UK – Tribunal Statistics Quarterly (January to March 2026)
• Law360 UK – Employment Tribunal Backlog Grows to 531,000
• Brodies LLP – Latest Employment Tribunal Statistics: Claims Continue to Surge
• theHRD (Simons Muirhead Burton) – Number of Employment Tribunal Claims Surges Beyond Half a Million
• The Employment Law Solicitors – Tribunal Claims
• Freeths – Employment Tribunal Statistics: A Growing Backlog and the Rise of Interim Relief Applications
• Bellevue Law – Employment Tribunal Statistics (January–March 2026): Backlog Pressure
• White & Case LLP – Unfair Dismissal Reform: Considerations for Sponsors
• Brodies LLP – Employment Rights Bill Passed with Removal of Cap on Unfair Dismissal Compensation
• Crossland Employment Solicitors – Unfair Dismissal Compensation Under the Employment Rights Act 2025
• Ogletree Deakins – UK Employment Rights Act 2025 Lifts Cap on Unfair Dismissal Compensation Claims
• Macfarlanes – Removal of the Statutory Cap on Unfair Dismissal: Implications for Private Capital
• DLA Piper (Knowledge) – The Impact of Changes to Unfair Dismissal
• SE Solicitors – Extension of Employment Tribunal Time Limits
• Wilsons Solicitors – The Employment Rights Act 2025: Unfair Dismissal and Changes to Implementation Dates