Although there are a raft of changes as a result of the Employment Rights Act (see ERA Timeline), undoubtedly the change that our clients have the most questions about is the reduction to the qualifying period for unfair dismissal from 2 years to 6 months, which takes effect on 1 January 2027.
The two most frequently asked questions this month relate to this and are as follows:
1. What impact do notice periods have on qualifying service under the new regime and do we have to include them when calculating qualifying service?
As long as the employee has a pay in lieu of notice clause within their contract and you exercise that right; i.e. you pay them in lieu of their contractual notice period, the contractual notice period does not get added to their period of service. However, for employees who have been employed for over a month but for less than two years, the law adds one week when determining their period of qualifying service. This means that even if you do exercise the contractual right to pay in lieu of notice, you need to factor in this additional notional week.
What that means in practice, is that you need to communicate dismissal decisions over a week before the six month qualifying period to avoid the employee being deemed to have 6 months service and a right to bring an unfair dismissal claim due to the notional week of service being added.
2. In view of the changes, what is the recommended duration for probationary periods?
We would advise between 3–4 months. For junior roles or where employees are on site full time/closely managed, a 3-month probationary period should be sufficient. You can also build in the ability to extend the probationary period for a further 6 weeks.
That said, we acknowledge that for the majority of our clients, it is difficult to properly assess suitability and performance within a 3-month period, particularly with hybrid working and for more senior roles. 4 months does still provide enough time for a short extension of the probationary period (we recommend 4 weeks) if this is required/or time in case meetings are delayed. However, where probationary periods are extended or meetings are delayed, it is important to remember to factor in the notional week referred to above to ensure that the employee does not have 6 months service at the time of the dismissal.
We recommend reviewing and updating the probationary periods in your existing contracts before issuing them to employees who commence employment on or after 1 July 2026. You should also check that your contracts include an appropriate pay in lieu of notice clause. In addition, it is vital to ensure that managers are fully briefed and trained on any changes to probationary periods and that they understand the importance of conducting the reviews in a timely manner.
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We’re here to help with any questions or concerns you may have. Whether you need expert advice or would like an initial conversation about our services, pricing, or the options available, please don’t hesitate to get in touch. At Refreshing Law, what sets us apart from other law firms is that you’ll get to speak to an experienced employment lawyer right from the very first call.
lreynolds@refreshinglawltd.co.uk
Lousha Reynolds
Refreshing Law