Summary: The UK Government has reduced the unfair dismissal qualifying period from two years to six months, taking effect from 1 January 2027. This affects anyone starting work from 1 July 2026 onwards. The compensation cap has also been removed, creating unlimited liability. HR teams must urgently review their probation periods, ensuring they’re shorter than six months with built-in flexibility for holidays and absences. Strong evidence-based processes are essential. Clear expectations, regular documented meetings and manager training will be critical to navigate this tighter decision-making window and protect organisations from costly claims.

Phrases like “game changer” or “once in a lifetime” are often over-used. However, when it comes to the Employment Rights Bill (or ERB) – or, now, the Employment Rights Act 2025 – it is not misplaced. The passage of the ERB through Parliament has not been smooth; it has been the subject of much debate and a fascinating game of Parliamentary “ping-pong”. In its original plan to change unfair dismissal rights, the UK Government sought to introduce a day-one right, along with a complicated “initial period of employment” and a modified dismissal procedure.  

But, in November 2025, facing opposition from the House of Lords and business groups, the Government dramatically “U-turned” on this key manifesto pledge in favour of a six-month qualifying period of service, while also throwing in a curveball of removing the current compensation cap.

While this brings certainty for employers, the introduction of this much-reduced qualifying period from 1 January 2027, from its current two-years, will shine a spotlight on probation periods. This means any new starter from 1 July 2026 will qualify for the right not to be unfairly dismissed from 1 January 2027.

Now is the time for HR teams to revisit their probation periods and embed good management behaviours. But how?

Review your probation periods

Your first step is to review probation periods. Probation periods are a key management tool and businesses with longer probation periods should consider shortening them. Having a set six-month probation period means that employers are really up against it when deciding on continued employment.  A holiday, absence or diary clash could mean a decision to terminate employment moves beyond the “magic” six-month period. This would place the business at risk of an ordinary unfair dismissal claim and potentially unlimited compensation.  

Some employees may need reasonable adjustments made to their roles if they have a disability (as defined under the Equality Act 2010). This, again, would require flexibility in the timetable. Statutory minimum notice (in the absence of notice being given within the six-month window) could be added on to the end of the probation period again impacting qualifying entitlements and dismissal rights.  

Actions:

• Revisit notice periods and include payment in lieu of notice clauses (where relevant).
• Factor in wriggle room and reduce your overall probation period (including an extension) to less than six months. 

Should you change now or wait till 1 January 2027?

The UK last had a six-month qualification period for unfair dismissal between 1974 and 1979. Many managers have never known such a short decision-making window.  Changing now could leave more time to embed good probation practices and allow for training and support. 

Manage your probation processes 

Be honest: does your business have robust, consistent, and well-managed probation processes? Do you have management training on probation, absence, conduct or performance management? If your decision to dismiss for poor performance was challenged (including outside of probation), would you have the evidence – the reviews, the meetings, the targets, the expectations, the support given – to be able to justify dismissal? 

Less than six months is not a long time to decide on someone’s suitability for a role, so HR and managers need to get organised.  For example: 

• Think about your recruitment processes: Are hiring managers ensuring that the person joining has the right skills to do the job well?
• Revisit job descriptions and ensure these are clear and communicated:  If you are assessing suitability for the job without a clear job description, how can you make that judgment? 
• Have a clear, diarised and well-documented onboarding timetable so the enw hire is ready to go from day one:  You do not have the luxury of waiting a week for a laptop to be set up or access given to systems.  
• Collect the evidence: Ensure that there are clear expectations, targets and timetabled, evidenced meetings.  
• Engage with stakeholders within the business:  Ensure there is a joined-up approach between other managers, colleagues, IT, facilities and HR.

Avoid knee-jerk reactions

To avoid probation pitfalls, clear communication is essential. Is someone on or off track? Has this messaging been made clear to the new hire? Are there meetings, emails sent and feedback given? Are managers adept at having tough conversations?

Handling the probation period is difficult, especially when managers are busy. But there is a real need (and urgency) to focus on making sound, evidence-based decisions and not knee-jerk reactions. Remember to take advice.

Employees will still have rights under equality laws and be able to bring automatic unfair dismissal claims, for example, for whistleblowing.  Following contracts of employment is also key. 

The clock is ticking – again

HR must seize the opportunity to clearly embed probation and performance management processes and challenge decisions – recruitment, extension or termination – where necessary. Training, awareness and support for managers will also crucial as they adjust to the new probation timetable.

As the qualifying period for unfair dismissal contracts and the stakes rise, employers who act now will be best placed to manage risk, make fair decisions and keep their people – and business – protected.

Key takeaways

What practical steps should you take before January 2027? Here’s where to focus your efforts:

• Act now, don’t wait. Start implementing changes immediately to give managers time to adjust to tighter decision-making windows and embed new processes properly.
• Shorten probation periods strategically. Reduce your standard probation (including any extensions) to under six months, factoring in holidays, absences and potential reasonable adjustments.
• Strengthen your evidence trail. Establish clear expectations from day one, schedule regular documented reviews and ensure managers record all feedback, targets and support provided.
• Invest in manager capability. Train line managers on conducting difficult conversations, making evidence-based decisions and avoiding knee-jerk reactions during probation.
• Fix the foundations first. Review recruitment processes, update job descriptions and create robust onboarding timetables so new hires can perform from day one.