Probation Archives - Refreshing Law

Managing probationary periods under the new 6-month unfair dismissal threshold

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.

CONTACT US

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.

02920 599 993

07737 055 584

lreynolds@refreshinglawltd.co.uk

GET IN TOUCH

Lousha Reynolds
Refreshing Law

The top questions we’re hearing from clients this month

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.