Having received Royal Assent on 18 December, 2025, The Employment Rights Act 2025 is already law, but many of its most significant provisions have been deliberately phased in, giving employers time to get their HR policies, contracts and management practices ready for the new regime.
This has been a relatively short window for employers to prepare for the unfair dismissal reforms. The most important practical consequence may not be the prospect of more tribunal claims, but the need to make better decisions, earlier.
The reduction in the unfair dismissal qualifying period will change not only employers’ legal exposure, but the way they manage recruitment and performance from day one. Employers will need to be much more rigorous about recruitment decisions, setting clear expectations and addressing under-performance early. The days when an employee could be managed informally during their first two years, with relatively limited unfair dismissal risk, are effectively coming to an end. Performance concerns will need to be identified, documented and addressed consistently, with managers equipped to have difficult conversations much earlier. For employers, the key shift is from treating the early months of employment as a relatively low-risk period to recognising that good employment practice and clear documentation need to start on day one.
Change in Qualifying Period
From 1 January 2027, the qualifying period for ordinary unfair dismissal will fall from two years to six months for eligible employees in England, Scotland and Wales. For employers accustomed to having a relatively long period in which to assess a new recruit before ordinary unfair dismissal rights become relevant, that is a material change. Six months is not long in employment terms. A new recruit may spend the first few months learning the business, building relationships and getting to grips with the role. By the time an employer has accumulated enough evidence to conclude that someone is not working out, the six-month point may be approaching rapidly. That makes the quality of the first six months considerably more important. The obvious focus will be on procedure and litigation risk. But there is a wider management issue here: how quickly does an organisation actually know whether it has hired the right person? For large employers, the answer may be supported by sophisticated HR systems, structured probation processes and specialist employment advice.
For smaller businesses, it may be much less clear. An SME may have no dedicated HR function. The person responsible for managing an employee may be the managing director, founder or department head. They may be highly experienced in running the business but have little reason to know that an apparently minor performance concern needs to be addressed now rather than at some later point. That is where the change could have its greatest practical impact.
Identifying Concerns
There is a temptation to view the six-month rule through the prism of dismissal: employers will have less than six months to decide whether to retain someone before the employee acquires ordinary unfair dismissal protection.
The real issue is therefore what happens during those six months. Performance concerns rarely arrive fully formed. They develop gradually. A manager notices that deadlines are being missed. A colleague raises concerns about communication. A client is unhappy. A piece of work needs repeated correction.
The natural managerial response can be to give the employee more time. Sometimes that is exactly right. New employees need time to learn. But there is a critical distinction between allowing someone a reasonable opportunity to improve and allowing a concern to go unaddressed. Acas research published in 2025 found that 46% of employees working for SMEs experienced workplace conflict in the previous 12 months, compared with 42% in larger organisations. Capability and performance were the most common causes of conflict, accounting for 38% of cases. That matters under the new regime. If capability is one of the principal sources of workplace conflict, employers need to be confident that they can identify and manage capability concerns before they become entrenched.
Probation needs to mean something
One practical consequence should be a re-examination of probation. Too often, probation is treated as an administrative milestone. The employee reaches six months’ service, and somebody remembers that a probation review is due and a form is completed.
That is not an effective assessment process and will already be too late under the new law.
Probation should provide a structured opportunity to ask whether the employee is delivering what the organisation hired them to deliver. That requires clarity at the outset. What exactly was the employee recruited to do? What does satisfactory performance look like? What standards were communicated? What support and training were promised? What concerns have emerged? Has the employee been given a fair opportunity to respond?
The answers matter not only if a dispute arises, but because they force the organisation to make a decision while there is still time to act.
Risks for Large Organisations
The legislation applies to employers of every size, and it would be a mistake to assume that only smaller businesses need to worry.
Large organisations can have their own weaknesses: fragmented management structures, inconsistent documentation, overloaded HR teams and managers who assume someone else is dealing with a problem.
Even professional organisations are not immune.
Indeed, there is an amusing irony here for the legal sector. A law firm may employ employment lawyers who can explain the new regime perfectly to clients, while the firm itself may have a partner or team leader who has allowed concerns about a new recruit to go unaddressed for five months without a meaningful conversation.
Knowing the law and applying sound people management are not the same thing.
The same applies to businesses whose principal advisers are not employment specialists. A company may have excellent legal support on its commercial, property, tax or corporate affairs and still lack access to timely employment advice when a performance problem emerges.
The six-month deadline should change behaviour
The answer is not to turn every manager into an employment lawyer, nor to encourage employers to dismiss employees simply because the six-month point is approaching.
What is needed is earlier, better management. Employers should know what they expect from a new recruit before the person starts. Probation reviews should be meaningful. Concerns should be raised when they arise rather than saved for an annual review. Managers should know when a problem needs HR or legal input. And there should be a clear record of significant performance discussions.
These are familiar principles of good management. What changes is the consequence of not applying them early enough.
Under the old regime, an employer could allow a difficult situation to continue for many months without ordinary unfair dismissal rights being engaged. That breathing space is about to become considerably shorter.
Conclusion
The six-month qualifying period should therefore be treated as a prompt to improve management discipline, rather than simply, where there is any concern about capability, as a countdown to dismissal.
The better outcome is for employers to identify the right people, set them up to succeed and recognise early when something is not working, rather than simply becoming quicker at getting rid of unsuitable employees. For SMEs, the priority is to make sure the absence of a dedicated HR function does not mean the absence of an effective process.
For larger organisations, it is to make sure that having an HR function does not create false reassurance.
And for law firms, perhaps there is a small lesson of our own: being able to advise clients on the new rules does not exempt us from having to manage our own people properly.
Six months is a short time. The businesses that treat it as a deadline for better management, rather than simply a legal deadline, will be better prepared for what comes next.
Phillip Vallon, Partner, Employment & Immigration Law at Druces.
To speak with Phillip Vallon, contact him at p.vallon@druces.com or call +44 (0)20 7216 5568.
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Article originally published on: Law360, at 6-Month Unfair Dismissal Rule Will Demand Early Oversight – Law360