As many employers will already be aware, most employment tribunal time limits are due to double from three months to six months from October 2026 under the Employment Rights Act reforms. The intention is to give employees more time to consider potential claims and seek advice before commencing proceedings.
One anomaly in the legislation had attracted considerable attention. While the majority of employment tribunal claims were included within the extension to six months, breach of contract claims appeared to have been omitted. This meant that, uniquely, breach of contract claims in the employment tribunal would have remained subject to a three-month limitation period.
The Government has now moved to address this inconsistency through draft legislation which will extend the time limit for employment tribunal breach of contract claims in England and Wales from three months to six months, bringing them into line with most other employment claims. The changes are expected to take effect from October 2026.
What Will This Mean for Businesses?
While the change may appear technical, it has a number of practical implications for employers.
Disputes Will Remain “Live” for Longer
The most immediate impact is that employers will face a significantly longer period of uncertainty following the termination of employment. Previously, many employers could take comfort that any claim for wrongful dismissal or other contractual breach would need to be brought within three months. From October 2026, that exposure period will double.
Businesses may therefore find that issues they considered closed have the potential to resurface many months after an employee has left.
Increased Likelihood of Tribunal Claims
Longer limitation periods generally result in more claims being brought. Employees who may previously have missed the time limit, delayed seeking advice, or spent longer attempting to resolve matters informally will now have a greater opportunity to commence proceedings.
For employers, this could mean an increase in breach of contract claims relating to notice pay, bonus entitlements, commission arrangements, restrictive covenants and other contractual disputes arising on termination.
Greater Importance of Record Keeping
Employers will need to ensure that relevant documentation relating to their employment records are retained and accessible for longer periods of time. Termination correspondence, employment contracts, bonus schemes, emails and disciplinary records will become important evidence in defending a claim brought by a former employee many months later.
Organisations should review document retention policies and ensure that their managers understand the importance of preserving employment records such as one to ones, or supervision meeting notes even when they are not connected with disputes or contentious departures which must be retained.
Longer Exposure Despite Early Conciliation
All of this means that the extension should also be considered alongside the longer Acas Early Conciliation periods introduced as part of wider employment law reforms. Limitation periods are paused during Early Conciliation from previously 6 weeks to 12 weeks, employers should expect to find that they will be dealing with potential claims substantially longer after the employment relationship has ended than is currently the case.
Increased Focus on Exit Management
This development reinforces the need for employers to manage dismissals and exits carefully. Exit interviews with notes retained may assist as a contemporaneous note that there was no conflict anticipated when an employee left employment. Clear contractual documentation, robust termination processes and the timely resolution of disputes (using the grievance procedure), will become even more important where potential claims can be brought for a longer period after employment ends.
In summary
The Government’s decision to align breach of contract claims with the wider six-month limitation period removes an obvious inconsistency in the legislation. However, from an employer’s perspective, it also extends the period of legal risk following employee departures.
Businesses should use the lead-in time before October 2026 to review record retention practices, contract management procedures and termination processes, ensuring they are prepared for a world in which employment disputes remain live for considerably longer than they do today.
