If your business uses six-month probation periods, now is the time to review your approach.
Recent changes under the Employment Rights Act 2025 mean employers can’t afford to wait until January 2027 to start preparing.
In fact, thanks to the retrospective nature of the legislation, businesses recruiting from 1 July 2026 could already be affected.
While probation periods remain an excellent way to assess whether someone is the right fit for your business, the way they’re managed is about to become much more important.
Here’s everything you need to know.
What’s changing?
From 1 January 2027, the qualifying period for bringing an ordinary unfair dismissal claim will reduce from two years to just six months.
On paper, that sounds straightforward.
However, the important detail is that the change applies retrospectively.
This means any employee with six months’ service or more on 1 January 2027 will automatically gain unfair dismissal rights from that date.
Why does that matter?
Imagine you recruit someone on 1 July 2026.
They complete a standard six-month probation period and you’re planning to end their employment because things haven’t worked out.
If that dismissal takes effect on or after 1 January 2027, you’ll potentially need to demonstrate that you’ve followed a fair dismissal process.
For many employers, that’s a significant shift.
A quick timeline
1 July 2026
Employees joining your business on a six-month probation period could be affected by the new rules.1 January 2027
Employees with six months’ service gain the right to claim ordinary unfair dismissal.From January 2027 onwards
Employers may need to follow a full, fair dismissal process when ending employment at the conclusion of probation.
What does this mean for SMEs?
Many SMEs have traditionally viewed probation periods as a relatively straightforward way to assess new starters.
If someone wasn’t the right fit, employers generally had greater flexibility to end employment before two years’ service.
That’s changing.
While probation periods aren’t disappearing, employers will need to demonstrate much stronger processes if concerns arise.
As Claire explains:
“A probation period shouldn’t be treated as six months of waiting to see what happens. It should be an active process of supporting employees, setting expectations and addressing concerns early.”
Emma adds:
“Good documentation has always been best practice. From 2027, it becomes even more valuable. Businesses that invest a little time in getting probation right now could save themselves significant time, stress and cost later.”
Should you shorten your probation periods?
For many employers, this is the big question.
There isn’t a one-size-fits-all answer, but there are two realistic options.
Option 1: Reduce probation to three or four months
Many employers are considering shortening probation periods.
This provides time to:
- assess performance earlier
- extend probation if necessary (where contracts allow)
- make decisions before unfair dismissal protections apply
For some businesses, this will offer greater flexibility.
Option 2: Keep a six-month probation period
There’s nothing stopping employers from keeping a six-month probation.
However, if employment needs to end, you’ll need to approach dismissal much more carefully.
That could include:
- following the Acas Code of Practice
- investigating concerns properly
- providing feedback and opportunities to improve
- issuing warnings where appropriate
- documenting every stage of the process
Failing to do so could expose businesses to an unfair dismissal claim and, in some cases, increase compensation by up to 25% if the Acas Code isn’t followed.
Probation periods should never be a tick-box exercise
A successful probation period isn’t simply about deciding whether someone passes or fails.
It’s an opportunity to help new employees succeed.
A strong probation process should include:
- Clear objectives from day one
- A structured induction
- Early review meetings
- Regular feedback
- Training and support
- Written records of discussions
- A final probation review before any decision is made
The better your process, the easier it becomes to make fair, evidence-based decisions.
Don’t forget your contracts
Probation periods are contractual.
Your employment contracts should clearly state:
- the length of probation
- any different notice periods
- whether probation can be extended
- any different contractual terms that apply during probation
Now is an ideal opportunity to review whether your contracts still reflect how your business operates.
Another important change coming in January 2027
Alongside the reduction in qualifying service, the upper cap on compensatory awards for unfair dismissal is also being removed.
Although awards above the current limit are relatively uncommon, it reinforces the importance of following fair, consistent HR processes.
How Breathe can help
As your business grows, manually tracking probation reviews, performance conversations and documentation becomes increasingly difficult.
That’s where Breathe HR can make a real difference.
As proud Breathe Platinum Partners, we regularly help SMEs use the platform to create more consistent and compliant HR processes.
With Breathe, you can:
- Schedule probation review meetings
- Record performance discussions
- Store notes and documentation securely
- Track objectives and progress
- Keep employment records in one central place
- Give managers a clear framework for probation reviews
Rather than relying on spreadsheets, emails or handwritten notes, everything is stored safely and is easy to access if needed.
Read our blog here about the benefits of Breathe HR for SMEs.
Our advice
These changes might not come into force until January 2027, but employers should start preparing now.
Waiting until the legislation takes effect could leave businesses scrambling to update contracts, policies and manager training.
Taking action now means you’ll have time to review your processes properly and make informed decisions that work for your business.
As Emma says:
“Employment law is changing at a faster pace than many SMEs have experienced before. The businesses that stay ahead are the ones that review little and often, rather than waiting until a problem lands on their desk.”
Frequently Asked Questions
Q: Do I have to reduce my probation period?
A: No.
Many employers may choose to, but it’s not a legal requirement. You can keep a six-month probation provided your processes are robust enough if employment needs to end.
Q: Can I still dismiss someone during probation?
A: Yes.
However, from January 2027, employees with six months’ service may have ordinary unfair dismissal rights, meaning you’ll need to demonstrate a fair reason and fair process.
Q: What if someone started before January 2027?
A: The new rules apply retrospectively.
Employees who have six months’ service or more on 1 January 2027 will benefit from the new qualifying period.
Q: Should I update my contracts?
A: It’s worth reviewing them now.
Check your probation clauses, notice periods and extension provisions to ensure they still meet your business needs.
Q: How often should probation reviews take place?
We recommend more than one review.
A: A good structure is:
- Week 1
- Month 1
- Mid-probation review
- Final probation meeting
This gives employees regular feedback and provides employers with a clear record of progress.
How can CE People help?
Whether you already have HR processes in place or are starting from scratch, we can help you prepare for the upcoming employment law changes.
From reviewing contracts and policies to training managers, implementing Breathe HR and supporting difficult employee conversations, we’ll help make sure your business is ready for what’s ahead.
Need support reviewing your probation process? Get in touch with the CE People team for practical, jargon-free HR advice that’s tailored to your business.
