In my previous column, I explored the first wave of reforms under the Employment Rights Act 2025 and what employers should be doing as changes began to take effect in April 2026 (read it here). For many employers, however, the most significant shift is still to come.
From January 2027, the qualifying period for ordinary unfair dismissal is set to reduce from two years to six months’ service.
Alongside this, the government has proposed removing the compensation cap for unfair dismissal claims – a change that would significantly increase employers’ financial exposure. Taken together, these reforms represent one of the most consequential shifts in employment law for decades.
Although the law will not change until January, its impact is already being felt. Employees recruited now will be among the first to reach six months’ service when the new regime comes into force. In that sense, the transition has already begun.
The question for employers is therefore not simply what will change in 2027, but how confident they are in the decisions they are making during the first six months of employment.
From flexibility to accountability
Under the current regime, employers have been able to operate with a degree of flexibility in the early stages of employment. If a new hire is not quite right, there is often time to see whether things improve. Decisions can be delayed or revisited, and the legal risk remains relatively contained until much later in the employment relationship.
A six‑month qualifying period changes that dynamic entirely. It creates a fixed decision window within which employers need to form a clear and defensible view on performance, capability and fit, while the potential cost of getting that decision wrong is increasing.
What was once a relatively low‑risk “wait and see” period becomes a compressed point of accountability.
Probation periods: not new, but newly exposed
At first glance, many employers may assume that little will change. Six‑month probation periods are already common, and on paper the structure looks familiar.
In practice, however, the scrutiny changes. Probation has often been treated as a flexible and sometimes informal phase, shaped by individual managers and focused more on settling in than on structured assessment.
From 2027, that approach becomes harder to justify. A dismissal at, or around, six months is more likely to be examined in terms of fairness, consistency and evidence. If compensation is no longer capped, the stakes of that scrutiny increase further.
Probation therefore shifts from being an operational tool to something that must also operate as a defensible, well‑documented process.
The real issue: delayed decisions
The biggest risk is not the legal reform itself, but the familiar management habit of delaying difficult decisions.
In many organisations, early concerns about a new hire are noted informally but not documented. Issues may be discussed but not clearly followed up, or simply deprioritised. By the time those concerns become more concrete, often towards the end of probation period, there is limited time to address them properly.
Under the new regime, that delay becomes far more significant. Employers may find themselves making last‑minute decisions with limited supporting evidence, at precisely the point where unfair dismissal protection applies or is about to apply. Where compensation is also potentially uncapped, that combination creates obvious exposure.
This is less a new problem than an existing one brought into sharper focus.
Rethinking the first six months
If the risk sits in early decision‑making, the response is not necessarily more process, but better use of time at the start of employment. The first six months need to become more structured and deliberate. Expectations should be clear from the outset, so employees understand what success looks like early on. Feedback should be regular and purposeful, rather than concentrated in a single end‑of‑probation discussion. Where concerns arise, they should be addressed at the point they emerge, not revisited retrospectively.
Managers also need to feel confident giving clear feedback, documenting concerns where appropriate and taking timely decisions where issues remain unresolved.
How long should probation be now?
There is unlikely to be a single “correct” answer to probation length. A six‑month period will remain common, but the more important question is whether that structure genuinely supports timely, well‑evidenced decisions.
Some employers may find that earlier, more formal review points make a greater difference than changing the overall duration. Others may wish to revisit how extension clauses operate in practice. In each case, the focus should be on ensuring that decisions are reached and can be evidenced before the six‑month point.
The key question is not “how long is probation?” but “does our process allow us to make confident decisions in time?”
Bottom line
For larger organisations, established HR processes may absorb much of this change. For SMEs, the impact is often more immediate. Lean teams and competing priorities can mean that early‑stage performance management is more reactive than planned – which is precisely where the risk now sits.
The direction of travel is clear: earlier rights, stronger enforcement and greater accountability for employers. The reduction in the unfair dismissal qualifying period, particularly when combined with proposals to remove the compensation cap, does not prevent businesses from managing performance or making difficult decisions. It does, however, require those decisions to be taken earlier, and with greater structure and confidence.
Crucially, this is not a distant issue. Employees being recruited now are already on track to reach six months’ service at around the point the new regime comes into force in January 2027. The decisions employers make and how they document them over the coming months will therefore determine their exposure under the new framework.
For employers who act now to refine how they assess, support and, where necessary, part ways with new hires, the transition should be manageable. For those who continue to rely on informal, extended “settling in” periods, the shift may feel both sudden and significantly more costly.
This article is by Imogen Finnegan, Senior Consultant, Bellevue Law