UK unfair dismissal reform: Get ready to update your probation period

Summary

The Employment Rights Act 2025 reduces the qualifying period for ordinary unfair dismissal from two years to six months, effective 1 January 2027 for employees who start on or after 1 July 2026. The statutory cap on compensation has been removed, creating potential unlimited liability for employers. HR teams must urgently review and redesign probation periods and related processes to reduce risk.

Key Points

The qualifying period for ordinary unfair dismissal falls to six months from 1 January 2027 (applies to starters from 1 July 2026).
The previous compensation cap is removed — employers face potentially unlimited awards for unfair dismissal.
Probation periods and any extensions should be reworked so total time before automatic qualification is under six months (factor in notice, holidays and absences).
Evidence-based decisions are critical: clear job descriptions, documented onboarding, targets, timed reviews and written feedback are essential.
Train and support line managers to have tough conversations, record performance and avoid knee-jerk terminations.
Review notice clauses (including payment in lieu), reasonable adjustments under the Equality Act, and ensure joined-up stakeholder involvement (HR, IT, facilities).

Content summary

The article explains the Employment Rights Act 2025 change and why it is a major shift for employers. With the qualifying period cut to six months and the compensation cap removed, the usual decision window for probationary dismissals is dramatically tightened. A single holiday, long absence or delay in setting up onboarding could push a dismissal outside the new six‑month window and expose employers to ordinary unfair dismissal claims with uncapped awards.

Practical advice focuses on shortening probation periods (including any extensions), building in flexibility for absences and reasonable adjustments, strengthening evidence trails (diarised reviews, targets, written feedback), and investing in manager capability to ensure fair, documented decision-making within the shorter timeframe.

Context and relevance

This is a material legal change for UK employers and HR professionals. It alters risk profiles for hiring and dismissal decisions and aligns with wider scrutiny of employment law reforms. For organisations that rely on longer probation windows to assess fit, the reform demands immediate policy and process changes — especially for recruitment, onboarding and performance management.

Why should I read this

Short version: if you hire people in the UK, this directly hits your risk and payroll. You need to tweak probation, train managers and lock down evidence now — otherwise one missed review or a holiday could cost your business dearly. Read it so you’re not caught scrambling when 1 January 2027 arrives.