As employers across England and Wales prepare for the upcoming employment law updates, one core shift stands out for talent management: the reduction of the unfair dismissal qualifying period from two years to six months.
While this change formally takes effect on 1 January 2027, its practical impact is already here. Any employee recruited from July 2026 onwards will reach their six-month service mark just as the new rules come into force.
Relying on traditional six-month probationary reviews carried out near the end of the probation period now carries significant financial and legal risk.
The End of “Wait and See” Probation
Historically, employers could comfortably wait until month six to assess a new hire’s suitability, knowing they had a two-year safety buffer before unfair dismissal rights kicked in.
From 1 January 2027, dismissing an employee with six months’ service will require a fair statutory reason (such as capability or conduct) and a fair, documented procedure.
This change creates distinct operational challenges:
- Compressed Decision Timelines: A decision on whether a new hire is working out must now be finalised well before six-months. We would recommend month 4 for this to allow time for extensions, or in case meetings slip.
- The Uncapped Risk: Alongside the reduced qualifying period, the cap on the compensatory award in ordinary unfair dismissal claims is being removed. Dismissing a senior executive or high earner during a botched probation period could result in claims for substantial, uncapped future loss of earnings.
Rethinking Onboarding & Suitability Checks
To adapt to this condensed timeline, HR teams and line managers must move from passive probation monitoring to structured, early-stage discussions and reviews.
- Strengthen your recruitment process in the hope that this will increase your chances of getting an employee who is suitable for the role and for the organisation. Consider the format and the approach.
- Formalise review checkpoints during the probationary period to encourage managers to review and communicate expectations and objectives throughout the probationary period (rather than just leaving this to its expiry).
- Address underperformance immediately. If a new recruit is struggling with capability, conduct, or culture fit, address it and document it.
Key Contractual Considerations
In addition to updating management practices, employment contracts and offer letters should be reviewed to align with the new threshold:
- Shortened Notice Periods During Probation: Ensure employment contracts specify a short notice period (e.g., one week) during the initial probation period to allow swift termination if a fit is clearly lacking and ensure that they include a pay in lieu of notice clause.
- Discretionary Probation Extensions: Include explicit contractual rights to extend probation where genuine reasons exist, while remaining mindful of the absolute 6-month statutory cap for unfair dismissal rights (and the need to factor in the statutory notice period of one week).
3 Immediate Steps for HR Leaders
- Audit Recruits Hired Since July 2026: Review all recent hires and map out their probationary review and expiry dates, as well as their 6 months of service against the 1 January 2027 deadline.
- Audit Employees with Less Than 2 Years’ Service: Underperformers? Conduct issues? Doubts about suitability for the role or the organisation? If an employee doesn’t have two years’ service, consider taking dismissal action prior to 1 January 2027 (as after that date, you will need to follow a full process and have a fair reason to dismiss).
- Train Line Managers on Early Interventions: Educate managers that delaying performance feedback is no longer a low-risk option; early, honest feedback and thorough documentation is essential.
If you need support in navigating this change, whether it is updating documents or advice on managing exits prior to the 2027 reforms, contact the team at Refreshing Law for practical, expert advice.
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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