The Employment Rights Act is changing the rules — and your probation process needs to change with them.

From 1 January 2027, employees will gain the right to bring an unfair dismissal claim after just six months’ service, down from the current two-year qualifying period. At the same time, the cap on unfair dismissal compensation is being removed entirely. That combination of lower threshold and unlimited exposure means the stakes around early employment decisions are about to rise dramatically.

If your probation process still looks the way it did five years ago, now is the time to rethink it.

Whilst changes take effect on 1 January 2027, the time to act is before then. Employees who already have six months’ service on that date will be within scope from day one of the new regime – meaning this could affect how you need to manage probations for anyone you hire from 1 July 2027.

What’s Actually Changing?

Under the current rules, employers have had a generous two-year window before an employee can bring a standard unfair dismissal claim. That long runway meant that even informal or loosely documented dismissal decisions carried relatively low legal risk.

That runway disappears on 1 January 2027.

From that date, any employee with six months’ continuous service – measured to the effective date of termination, including any notice period – will be entitled to bring an ordinary unfair dismissal claim. And without the compensation cap, the financial consequences of a badly handled dismissal will be significantly higher than they are today.

It’s also worth noting that day-one rights remain unchanged. Claims for discrimination, whistleblowing, or asserting statutory rights can be brought regardless of length of service. Even before an employee hits the six-month mark, a documented rationale for any dismissal is wise.

What This Means For Probation

Probation used to function as a useful but optional tool: a structured window that many employers ran informally, relying on the two-year qualifying period as a backstop. That backstop is gone.

Probation is now your primary (and in many cases your only) protected window to assess performance, address concerns, and make an exit decision before unfair dismissal rights arise. If you haven’t resolved the situation before the six-month mark, you’re no longer operating in a low-risk zone. You’re operating within the full framework of unfair dismissal law.

The key practical point: decisions need to be made and implemented (not just identified) well before month six. That includes serving notice in time for the effective date of termination to fall before the qualifying period is reached.

Rethinking Probation Length

The traditional structure of either a six month probation or three months plus a three-month extension deserves a hard look. In practice, this approach is tight. Diary clashes, absence, delayed reviews, and slow decision-making can easily push things beyond the six-month mark before anyone has noticed.

A more practical approach for many employers will be a three-month core probation period with a short extension of no more than two months for borderline cases. This gives enough time for genuine assessment while preserving meaningful headroom before unfair dismissal rights kick in.

One important clarification from the legislation: the Act doesn’t make probation periods beyond six months unlawful, but extending probation past six months is largely pointless for the purpose it’s meant to serve. Once an employee has six months’ service, they have ordinary unfair dismissal protection regardless of whether their probation has formally ended. If you’re still reviewing someone at month seven, you’re already in the full disciplinary framework.

The Case for a Modified Disciplinary Process During Probation

Here is where many employers have an opportunity to sharpen their approach.

Where an employee’s performance is genuinely borderline (not a clear pass, but not a clear fail either) a structured early-stage disciplinary process can give you both the flexibility and the evidential trail you need.

Rather than relying solely on a probation review meeting, consider implementing a modified disciplinary procedure for use within the first six months. This could include the issuance of a written warning or, in more serious cases, a final written warning, tied directly to a probation extension. This approach achieves several things at once:

  • It puts the employee on formal notice of specific concerns
  • It creates a clear, documented record of what was communicated and when
  • It provides a structured improvement period with measurable expectations
  • It demonstrates procedural fairness, which matters even before the six-month mark
  • It gives you a defensible basis to act if the situation doesn’t improve after 6 months as the active warning can be taken into account once unfair dismissal rights kick in.

If the employee’s conduct or performance deteriorates further after a written warning, or if the issues remain unresolved by the time a final written warning has been issued, you are in a far stronger position to proceed to dismissal post their first 6 months of employment and to demonstrate that a fair process was followed.

This approach is particularly useful in borderline situations where you want to give someone a genuine chance to turn things around without losing the ability to act swiftly if they don’t.

What a Robust Probation Process Looks Like in Practice

A probation clause in the contract is not a probation process. The clause is meaningless without the substance behind it. Here is what that substance needs to include:

Clear expectations from day one. A proper job description, short-term goals, and a training plan should all be in place before the employee starts. If the employee doesn’t know what success looks like, you can’t hold them to it.

Structured review meetings at regular intervals. Not a single meeting at the end of the probation period. Reviews should happen at one month, two months, and at the point of the formal outcome at three months. Each review should be documented.

Honest, specific feedback when concerns arise. Vague reassurances (“you’re doing fine, just keep going”) create problems later. If there are concerns, they need to be named clearly and recorded in writing.

A genuine opportunity to improve. This is especially important if you’re operating a modified disciplinary process. Employees must be given a real chance to address the issues raised.

A written outcome at the end of probation. Whether the employee passes, has their probation extended, or is not continuing, that outcome should be confirmed in writing. It closes the loop and creates a record.

Every one of these steps builds the evidential record that protects you if a decision is challenged.

Key Actions and How HR Optimisation Can Help

Consider the following:

  • Audit your current template letters and outcome documents to ensure they’re fit for purpose
  • Review and shorten your probation period if it currently runs to six months
  • Draft or update a modified disciplinary procedure for use within the probation window
  • Ensure all probation reviews are documented as a matter of course
  • Train line managers on both the new rules and how to have performance conversations early

We can support you every step of the way. From carrying out a review of your probation policy, procedure and review templates, configuring automatic HR information system review reminders or delivering manager training sessions to help ensure consistency and robustness in application of probation management across your org, our team can help. Please contact us on hello@hroptimisation.co.uk with a brief overview of your needs and we will be happy to arrange a call to explore further.

Article by Hannah Powell, Senior HR Consultant