Unfair Dismissal & Probation

An overview of unfair dismissal changes under the Employment Rights Act 2025

According to the Government's Employment Rights Act 2025 roadmap, the following changes will take effect in January 2027.

Unfair dismissal qualification period reduced to six months

The Employment Rights Act 2025 will reduce the qualifying period for protection from unfair dismissal from two years to six months.

The Government had originally planned to remove the qualifying period completely, so that all employees could bring an unfair dismissal claim from day one in their job. Following pushback from the House of Lords, the Government announced the revised proposal of unfair dismissal protection after six months.

The protection will take effect from 1 January 2027 (meaning that employees hired from 1 July 2026 would gain protection from unfair dismissal after six months).

Another significant late amendment to the Act removed the compensation cap for unfair dismissal (the cap is currently £123,543 or 52 times the claimant's weekly pay, if lower). This will also take effect on 1 January 2027.

What can HR do now?

Audit current practices: Review how often employees are dismissed in the first couple of years of employment, and the reasons for those dismissals. If necessary, consider a different approach to recruitment, onboarding and probation, to rely less on the potential to dismiss an employee if their employment does not work out.
Future-proof processes: Review the length of probationary periods with the aim that performance reviews can be completed before the employee gains the right to claim unfair dismissal. Embed procedures to ensure that managers act reasonably when employees are dismissed during or at the end of the probationary period, even where they do not yet have unfair dismissal protection. Check that managers are holding regular performance reviews with probationers.

1. With regard to the unfair dismissal qualifying right changing to six months: if an employee is absent for a period of time during their first six months and therefore loses a significant amount of time to be trained and assessed, is there an option of extending the qualifying period to reflect this?

A: No. The question of whether or not an employee has qualified for unfair dismissal protection is simply a matter of the length of time they have been employed under a contract of employment. As long as such a contract is in place, continuous service accrues even if the employee is off sick or on holiday for some or all of that time. Once the employee has been employed for six months (when the new law is brought into force) unfair dismissal protection will apply.
This does not mean that the employee cannot be dismissed. The employer could still extend a probation period and dismiss the employee at the end of that on the grounds of capability. But crucially the employee would be able in those circumstances to argue that the dismissal was unfair. Whether or not the employer had behaved reasonably in dismissing the employee would then be a matter for the tribunal to decide.

2. How does the six-month qualifying period affect fixed-term contracts for nine months to one year? How would we end this employment?

A: The expiry of a fixed-term contract without renewal is counted as a dismissal for the purposes of the right not to be unfairly dismissed (see s.95(1)(b) of the Employment Rights Act 1996). If that happens after the employee has achieved six months' service (under the new provisions), the normal rules of unfair dismissal will apply. The question will be why the contract was not renewed and whether that was for a potentially fair reason, such as redundancy. The tribunal will then consider whether or not the employer has acted reasonably in terminating the contract. The fact that the contract was for a fixed term does not give the employer any additional defence to an unfair dismissal claim.

Unfair Dismissal: common questions and practical scenarios

3. If someone is dismissed in the last week of their first six months but we pay in lieu of notice, will they still qualify to claim unfair dismissal?

A: Yes. This is an easy trap to fall into. The qualifying period for unfair dismissal is measured up to the "effective date of termination" (EDT), which is defined in s.97(1) of the Employment Rights Act 1996. Where the employee is dismissed without notice, the EDT is the day on which the termination "takes effect". Where the employee is dismissed with notice, the EDT is the day on which the notice expires.
All employees, however, are entitled to a minimum period of notice after they have worked for the employer for at least one month - see s.86 of the Employment Rights Act 1996. For the first two years of their employment that minimum period is one week. Note that the minimum period of notice does not apply if the employee is guilty of gross misconduct (s.86(6)).
For the purposes of qualifying for unfair dismissal, that minimum notice of one week is included in the overall period of employment (s.97(2)). So if an employee is dismissed without notice, their continuous employment is measured up until the end of the one week's notice that they should have been given. This is irrespective of any payment in lieu of notice that the employer might give.
This means that an employer cannot safely wait until the final week of a six-month probation period to dismiss the employee. If it does so then (unless the employee is guilty of gross misconduct) the minimum period of notice will be added to the overall period of continuous service and the employee will qualify for unfair dismissal protection.
Note that this rule only applies to the one week's notice that the employer must give under s.86. A longer contractual notice period will not be added to the continuous period of employment if the employee is dismissed without notice.

Unfair Dismissal: common questions and practical scenarios

Unfair Dismissal: Top takeaways from the recent on‑demand session

Do you operate a formal probation period and, if so, how long is it?

Yes – under three months
Yes - three months
Yes – six months
Yes – other
No – we don’t operate a probation period

Want the full picture? Watch the webinar on demand

Employment Rights Act 2025: Unfair dismissal changes

You’ve seen the key takeaways — now dive deeper into what the Employment Rights Act 2025 means in practice.

In this 60‑minute session, employment law expert Darren Newman covers:

The details of the unfair dismissal changes
What HR teams should be doing now to prepare
How the reduced qualifying period will impact probationary processes

With protection reducing from two years to six months and the compensation cap set to be removed, getting your approach right early has never been more important.

Watch on demand

If you do operate a probationary period, does the employer have the option of extending it?

Yes – beyond six months
Yes – but never beyond six months
No – it is a fixed period

Probation policy

Manage probation with confidence and reduce risk from day one.

With unfair dismissal rules changing, inconsistent probation processes can quickly become a risk.

This ready‑to‑use policy helps you take control, giving you a clear, practical framework to manage performance, document decisions, and reduce exposure.

Use it to:

Set clear expectations from the outset
Run consistent, structured reviews
Make fair, defensible decisions
Minimise legal and employee relations risk

Download the policy