The Employment Rights Act 2025 introduces a major reform to unfair dismissal law, whereby the qualifying period for unfair dismissal will reduce from two years to six months, and is set to take effect on January 1, 2027.
The key statutory changes are that employees will qualify for ordinary unfair dismissal rights after six months’ service, rather than two years; the compensatory award cap will be removed; and the qualifying period for written reasons for dismissal also reduces to six months.
These changes significantly increase early‑employment dismissal risk for employers.
Employers can no longer rely on the former ‘safe period’ of two years. Employees will be protected at six months (less the one-week statutory notice period), meaning many employees currently within their first two years will gain new-found rights. Government estimates suggest 6.3 million employees currently sit between six months and two years’ service.
Although most tribunal awards fall well below the existing cap, uncapped compensation increases theoretical exposure, especially for senior or specialist roles.
Probation periods that extend beyond six months no longer offer protection for a ‘risk‑free’ exit. Even within probation, dismissals must be substantively fair and procedurally sound once six months is reached. Employers who adopt ‘wait and see’ performance monitoring without structured management will be exposed to risk.
Employers will need to adopt day‑one fairness principles: regular reviews, documented feedback, and timely interventions.
Implications for probationary periods
The traditional three to six‑month probation is no longer a buffer from unfair dismissal claims. Employers will need to consider:
- Front‑loading induction, training and KPIs, so concerns are identified early.
- Ensuring that any dismissal before six months still complies with fair process, to minimise claims under day‑one protections (e.g., discrimination, whistleblowing).
This change will likely increase the number of claims brought by employees, as a larger pool of workers will now be eligible to challenge dismissals. Employers must be prepared for this increase and ensure that their dismissal processes are robust and compliant with the law.
Probation reviews will need to be more formal, regular and frequent, and better recorded to evidence fairness.
Next steps for employers
Probation policies should be updated to reflect that employees will gain unfair dismissal rights far earlier. Suggested updates include:
- Clear probation objectives and performance standards
- Formal mid‑probation and end‑probation reviews.
- Ability to extend probation where reasonable and explained.
- Explicit communication that dismissal decisions must still comply with statutory fairness obligations.
- Allow appeals, even during probationary periods to reduce the risk of discrimination claims
Due to the risk window closing at six months, employers must issue clear job descriptions and expectations on day one and provide early and frequent feedback. They should also address conduct or performance issues as soon as they arise and maintain well‑kept contemporaneous records.
Managers will need training on the new regime, particularly in recognising legally fair reasons for dismissal and understanding the need for fair procedure even during probation. They should be trained to avoid behaviours that could give rise to claims for automatically unfair dismissal or discrimination (still day‑one protections)
Review dismissal processes
Dismissal templates, checklists, and workflows must be updated to ensure:
- Documented legitimate reason for dismissal.
- Fair and reasonable investigation (where appropriate).
- Opportunity for the employee to respond.
- Written outcome and right of appeal
Where employers previously relied on long probation periods for assessing organisational fit, they will need to shift towards better pre‑recruitment screening (skills tests, references) and improved and early onboarding support to reduce performance failures.
Practical recommendations
- Treat the first three months as the risk management window – take all key decisions early; if an employee is not meeting expectations, act before month five.
- Introduce probation review templates and meeting schedules aligned to Weeks 4, 8, 12, and 20.
- Ensure disciplinary or capability procedures apply to probationers, albeit in a simplified form.
- Document every conversation about performance or conduct. Documentation will be vital for defending early unfair dismissal claims.
- Avoid automatic long probation extensions; extensions should be justified with specific evidence.
- Prepare for the abolishment of the compensatory cap by strengthening risk assessment in dismissal decisions.
Overall, The Employment Rights Act 2025’s reduction of the qualifying period for unfair dismissal claims to six months will require employers to reassess their policies and practices, particularly regarding probationary periods. Employers must ensure that their dismissal processes are fair, transparent and compliant with the updated legislation to mitigate the risk of unfair dismissal claims. By implementing robust procedures, allowing appeals and exercising caution in dismissals, employers can navigate the challenges posed by the new legal framework effectively.
Clients that would like to discuss training for staff can now access Woodfines Solicitors’
Employment Training Service.
Find out more about Woodfines Solicitors and the services it offers at their website.
