The Employment Rights Act 2025 represents one of the most significant reforms to UK unfair dismissal law in decades. While much of the focus has been on dismissal rights and compensation changes, one area that deserves equal attention is the probation period.
For employers, probation reviews are no longer just a routine HR process. They are becoming a critical risk management tool.
What is Changing Under the Employment Rights Act 2025?
Two major reforms directly affect how employers manage probation:
1. Reduction of the Unfair Dismissal Qualifying Period
Currently, employees must complete two years’ service before bringing an ordinary unfair dismissal claim.
Under the Employment Rights Act 2025, this qualifying period will reduce to six months from 1 January 2027.
This means:
- Employees hired after 1 July 2026 may gain protection during or shortly after probation.
- Early-stage dismissals will fall within the unfair dismissal framework far sooner.
- Employers can no longer assume probationary dismissals sit outside legal scrutiny.
In practical terms, probation decisions will carry legal weight much earlier in employment.
2. Removal of the Compensatory Award Cap
Historically, unfair dismissal awards have been capped at the lower of 52 weeks’ pay or a statutory maximum.
The new legislation removes this cap entirely, aligning unfair dismissal compensation with discrimination and whistleblowing claims, which are already uncapped.
For employers, this significantly increases potential financial exposure, particularly where high earners, commission structures, or bonus arrangements are involved.
Why Probation Periods Now Carry Greater Legal Risk
Probation periods are not a legal requirement in the UK, but they are widely used to:
- Assess suitability for the role
- Provide structured feedback
- Identify training and development needs
- Manage underperformance early
ACAS guidance has long recommended regular reviews, clear expectations, and reasonable support during probation. Under the new regime, these steps become more than good practice. They become evidence.
A poorly managed probation period could now result in:
- A viable unfair dismissal claim after six months
- Substantial uncapped compensation
- Reputational damage and tribunal risk
Probation is no longer a “safe zone”.
When Performance Concerns Arise During Probation
Where an employee is not meeting expected standards, employers may:
- Extend probation (if contractually permitted)
- Issue warnings and set measurable objectives
- Dismiss with notice
However, even during probation, employers must:
- Have a legitimate, non-discriminatory reason
- Act reasonably
- Follow contractual notice terms
- Ensure the outcome is not a surprise
The key principle is transparency. If dismissal follows probation, the employee should already understand the concerns and have had an opportunity to improve.
Why Extending Probation to Six Months Is Now Sensible
For organisations currently operating three-month probation periods, there is a strong argument for extending to six months.
With unfair dismissal protection aligning to six months’ service, a six-month probation allows employers to:
- Fully assess performance
- Conduct structured reviews at regular intervals
- Address concerns before statutory protection applies
- Make informed decisions within a clearer timeframe
This is not about avoiding protection. It is about ensuring decisions are made fairly, transparently and with proper evidence.
What Employers Should Review Now
In light of the Employment Rights Act 2025, employers should consider:
- Are probation clauses clearly drafted in employment contracts?
- Are review meetings formally scheduled and documented?
- Do managers understand how to handle probation fairly?
- Is there a clear process for extension or dismissal?
- Are expectations set from day one?
Probation documentation may soon be critical evidence in tribunal proceedings.
How enlightenHR Supports Employers
At enlightenHR Ltd, we help businesses strengthen their onboarding and probation frameworks so that they are both commercially practical and legally robust.
We provide:
- Legally compliant probation clauses
- Structured review templates
- Manager guidance and training
- Clear documentation frameworks
- Advice on extending probation to six months
The Employment Rights Act 2025 does not remove the ability to manage performance early. It simply raises the standard for how it must be done.
Businesses that review their probation processes now will be far better positioned as these changes take effect.
You can read more about the Employments Right Act in our Free business guide available to download here.
