From 1 January 2027, the probation process chnages, employees can claim unfair dismissal after six months’ service instead of two years. For small businesses, this changes the role of probation. It is no longer a relaxed trial period. It is the window in which you need to make, and record, a fair decision about every new hire.
What is changing
Under the Employment Rights Act 2025:
- Unfair dismissal protection starts at six months’ continuous service, for any dismissal taking effect on or after 1 January 2027.
- The cap on unfair dismissal compensation is removed, so awards are no longer limited.
- It covers your existing team. Anyone who started on or before 1 July 2026 will be protected from 1 January.
Claims that need no qualifying service, such as discrimination and whistleblowing, are unchanged.
Why probation is now where the risk sits
Many SMEs use a six-month probation. From January, the end of that probation and the start of unfair dismissal rights fall on the same day. Being “still on probation” offers no protection.
The timing is also tighter than it looks. Statutory notice can add a week to an employee’s length of service, so a decision made in the final weeks of month six may already be too late. In practice, decisions need to be made by around month five.
The government expects these changes to bring around 3,000 extra tribunal claims a year. It also notes that small businesses, with fewer formal processes and less HR support, are the most exposed.
What to do now
- Review your probation length. Six months is now too long for most roles.
- Update contracts, offer letters and your probation policy.
- Set clear, written objectives for every new starter in week one.
- Hold regular, recorded reviews and raise concerns early.
- Make sure line managers know the process and the deadlines.
- Check which current employees will pass six months before January.
How Nexus HR can help
We can review your current probation process and give you a clear plan for what needs to change before 1 January. Our probation toolkit includes updated contract wording, a policy written for the new rules, review templates and decision letters, plus training for your managers.
The change is less than three months away. Get in touch with Nexus HR call 01245 961982 or send an email and book your probation review.
General guidance, not legal advice. If you are considering dismissing someone close to six months’ service, speak to us first.
Sources
- Mishcon de Reya: Unfair dismissal rights from six months, and why acting at five months may not be enough
- Brightmine: Reduction in unfair dismissal qualifying period from two years to six months
- Thompsons Solicitors: Unfair dismissal under the Employment Rights Act
- Penningtons Manches Cooper: When six months is too long
