The reduction in the qualifying period for employees to bring an unfair dismissal claim, from two-years to 6 months, is a significant relaxation of the current threshold. This change will apply to dismissals from 1 January 2027.
Importantly, this means it will apply to employees who start work with your business from 1 July 2026, as they will have 6 months of service by 1 January 2027. Employers should be reviewing internal policies as a matter of urgency.
Employers need to think of the qualifying period as five months and three weeks to factor in the statutory notice period of one week.
Capability Dismissal
A type of dismissal affected will be capability dismissals at an early stage of employment (other types of dismissals will be addressed in future posts).
Dismissals by reason of capability will be a significant category of dismissals to be affected when looking at the interaction of an employee’s performance with their probationary period.
Probationary periods will assume a new importance as they will be the employer’s only real opportunity for low-risk capability dismissal.
Effectively, the standard six-month probation is now defunct.
The recommendation now is to have a three-month probation period, which can potentially be extended to 4/5 months. This is only a short window in order to assess performance and means that employers need a robust probation policy in place with active management of performance and correct decisions made during the short probationary period.
How To Implement An Effective Probationary Period?
Employers will need to have a matrix and a target for assessing performance in place from the start of employment. There will need to be regular performance reviews within that three-month period where areas of improvement and/ or concern are discussed and recorded from the start of employment. This is going to mean a much more intensive and structured approach by employers.
It would be beneficial to implement a clear probationary policy. Such a policy will help set out the specific steps and expectations that must be followed during the probationary period, ensuring that managers understand the process from the outset and can address any performance or conduct issues promptly. Establishing this structure now will also help safeguard the organisation by ensuring compliance with the new statutory framework, reducing the risk of procedural challenges later on.
Contracts will also need to be reviewed to ensure that there can be a speedy dismissal process within the first 6 months of employment, if necessary.
Evidence of performance reviews, training, support and concerns raised will be essential in defending a capability dismissal where the employee has qualifying service but was employed for a relatively short period of time, i.e. more than six months.
Conclusion
The changes introduced by the Employment Rights Act 2025 present both challenges and opportunities for employers. With the reduction in the qualifying period for unfair dismissal claims and the emphasis on effective probationary periods, it is crucial for businesses to adapt promptly. By implementing robust probation policies, establishing clear performance assessment matrices, and ensuring regular communication with employees, employers can navigate this new landscape effectively while minimising risk.
We urge all employers to take immediate action: review your current contracts and policies to align with these changes, and set up structured performance management processes. Doing so will not only facilitate compliance but also foster a more supportive work environment that benefits both employees and the organisation. Start making these vital adjustments today with the help of our expert employment law solicitors. Contact us at {{CONTACT_NUMBER}} or email EmploymentTeam@mshblegal.com to discuss the implications of the Employment Rights Bill and how to prepare for it.
