Unfair dismissal regulations affect employees joining from 1st July 2026

The Employment Rights Act 2025 introduces significant changes to unfair dismissal rights that employers need to prepare for well before they take effect.

Under the new legislation, any employee who has completed six months' continuous service by 1 January 2027 will qualify for unfair dismissal protection from that date. This means that employees recruited on or after 1 July 2026 could gain unfair dismissal rights after six months' service – even if they are still serving a probationary period.

For employers, this represents an important shift in how probation periods should be managed.

Probation is no longer enough on its own

Many employers have traditionally viewed probation as a relatively low-risk period for ending employment if a new recruit isn't the right fit. However, from January 2027, that assumption could expose your business to legal risk.

If an employee has reached six months' continuous service, dismissing them without following a fair and reasonable process could lead to an unfair dismissal claim, regardless of whether they are still within their contractual probation period.

In other words, having a probation clause in the contract and extending the probation past six months, does not remove the requirement to follow a fair procedure once unfair dismissal rights apply.

How employers can prepare

Now is the time to review your probation management process to ensure it is fit for purpose.

We recommend employers:

• Review probation procedures to ensure they are robust, clearly documented and applied consistently across the business.
• Schedule probation review meetings well before the six-month point. Don't wait until the final days of probation. Consider using a 3 month probationary period, to ensure you have enough time to extend. Remember, an employee's contractual notice period could take them beyond six months' service, even where notice is paid in lieu.
• Train managers to identify performance concerns early, keep accurate records and follow a fair process throughout the probation period.
• Ensure decisions are evidence-based, with clear documentation of conversations, feedback and support provided.

Extending a probation period

If you decide to extend an employee's probationary period, particularly where the extension takes them beyond six months' service, it's essential that the process is properly documented.

Good practice includes:

• Issuing a written letter confirming the extension and explaining why it is necessary.
• Clearly setting out the improvements required and the objectives the employee must achieve during the extension period.
• Holding regular review meetings and keeping records of discussions.
• If the employee does not successfully complete probation, taking detailed notes during the dismissal meeting and confirming the decision and reasons in writing.

The key takeaway

The recruitment decisions you make from 1 July 2026 could have legal implications from 1 January 2027.

By reviewing your probation procedures now, training your managers and ensuring fair processes are followed, your business will be in a much stronger position when the new unfair dismissal regime comes into force.

Need help preparing for the changes?

Employment law is evolving, and keeping policies and procedures up to date can be challenging for busy employers.

Our HR Membership gives you ongoing access to expert HR advice, bespoke contracts, compliant templates, training, practical guidance and support whenever employee issues arise. Whether you're reviewing probation procedures, updating contracts or managing difficult conversations, we're here to help you stay compliant and protect your business.

If you'd like to find out more about our HR Membership and how it can support your organisation, get in touch with our team today.

• HR