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Changes to day one employment rights coming down the track mean probation periods should be reviewed. Stacie Cheadle, technical writer at Croner, explains what employers need to do

Under the Employment Rights Act 2025 (ERA 25), the unfair dismissal regime will be changing significantly - with reforms ranging from an extended time limit to bring employment tribunals to qualifying service and unfair dismissal. These are going to have a major impact on employers and HR processes.

Background

Probation periods are a commonly used mechanism to assess the suitability of new hires. During this time, employers evaluate the employee’s skills, performance, and compatibility with the organisation.

Typically, probation periods range from three to six months, but the exact duration and terms are governed by the employment contract.

Employers often adopt more flexible disciplinary procedures during probation to maintain discretion in managing performance or conduct issues. While employees can be dismissed more easily during this period, employers must still ensure that terminations are not based on unlawful grounds, such as discrimination or whistleblowing.

In this feature, probation periods refer to an individual’s initial period of employment with an employer and not circumstances where an existing employee has moved into a new role within an organisation.

In those circumstances, although there may be a trial period for them to settle into the role, if that trial is unsuccessful, depending on the employee’s length of service with the organisation, it should not be brought to an end in the same way as for an employee on a probation period.

This is because it is likely that unfair dismissal protections would apply in that context and therefore a fair reason and reasonable process under the Employment Rights Act 1996 is required.

The current legal position

Under the law as it is currently, employees do not gain the right to claim ordinary unfair dismissal until they have completed two years of continuous service. This gives employers considerable flexibility in managing probation reviews and dismissals without the risk of an unfair dismissal claim. However, this will change significantly under the Employment Rights Act 2025.

What is changing under the Employment Rights Act 2025

From 1 January 2027, the qualifying period for employees to claim ordinary unfair dismissal will reduce from two years to six months. This reduction will apply retrospectively, meaning any employee with six months of continuous service as of this date will gain unfair dismissal rights.

This shift represents a major change in employment law, and it will have significant implications for how employers manage probation periods and new hires.

Importantly, the new six-month qualifying period will apply only to ordinary unfair dismissal claims.

Automatically unfair dismissal claims, such as those involving discrimination or whistleblowing, remain unaffected and do not require any qualifying service.

The ERA 25 also extends the time limit for bringing an unfair dismissal tribunal claim from three months to six months, effective from October 2026.

This gives employees more time to lodge claims, increasing the risks for employers who fail to follow fair procedures, as more time can pass between incident and claim, during which records can be lost and recollections diminish, and key staff members might move on from the organisation.

The risk of an unfair dismissal claim is also increased by the removal of the compensation cap for unfair dismissal claims, also effective from 1 January 2027. This means the potential award in unfair dismissal claims is unlimited.

Impact on probation periods

Currently, many employers set probation periods at six months. But with the upcoming legal changes, this approach becomes risky because employees would gain unfair dismissal protection immediately upon completing their probation.

As a result, a dismissal for failing a probation period would be required to meet the fair and reasonableness requirements of the Employment Rights Act 1996, including a full and fair process leading to the dismissal.

In the context of a conduct dismissal, for example, this would involve a series of warnings given in accordance with the Acas Code of Practice on disciplinary and grievances.

Key risks to employers include:

Delayed probation reviews: If a probation review meeting is delayed or a decision is not made promptly at the end of the probation period, the employee could pass the six-month threshold and gain unfair dismissal rights, making termination more challenging.
Extensions of probation: Employers often extend probation periods if an employee’s performance is borderline. However, under the changes to unfair dismissal, extending a six-month probation period would mean any dismissal would fall within unfair dismissal protection.
Fair procedures: With the reduced qualifying period, any dismissal following probation will need to adhere to fair procedures, even if performance concerns arise during probation.

Practical steps for employers

To mitigate risks and prepare for these changes, employers can take the following proactive steps:

1. Reduce probation period lengths
Employers should consider shortening probation periods to three, four, or five months. This provides a buffer period to extend probation if necessary or conduct final reviews before the employee reaches six months of service.

2. Conduct timely and thorough probation reviews
Regular review meetings during probation are essential. Employers should not wait until the end of the probation period to address performance or conduct issues. Identifying problems early allows for corrective action and ensures that decisions are made well before the six-month threshold.

3. Clear probation policies
Employers should ensure that probation policies are clearly outlined in employment contracts and handbooks. Policies should specify:

the duration of the probation period;
the process for extending probation (if applicable); and
the criteria used to assess performance and suitability.

4. Document performance and decisions
Maintaining detailed records of probation review meetings, performance concerns, and actions taken is crucial. This documentation provides evidence of fair treatment and due process, which can be critical in defending against potential claims.

5. Train managers
Line managers should receive training on probation management and dismissal procedures. They must understand the importance of conducting timely reviews, providing constructive feedback, and adhering to fair processes.

6. Review disciplinary policies
Employers should update disciplinary policies to ensure they do not inadvertently create risks for the organisation following the upcoming change. While probation periods offer some flexibility, dismissals must still comply with contractual and statutory requirements.

7. Prioritise recruitment quality
With reduced flexibility for dismissing unsuitable hires, it becomes even more important to recruit the right candidates. Employers should refine their recruitment processes to ensure they are attracting and selecting employees who are likely to succeed in the role.

By Stacie Cheadle, Croner technical writer

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