Probation Periods and the January 2027 Unfair Dismissal Change - Why Your 2026 Hires Come First

From 1 January 2027, unfair dismissal protection arrives at six months' service instead of two years, and the compensation cap disappears. The commencement regulations are already made, so the date is law rather than intention.

The arithmetic makes your 2026 hiring cohort the first test. Anyone hired on or before 1 July 2026 will already have six months' service when the change lands, and gains protection on day one of the new regime; everyone hired after that qualifies during 2027 as they individually reach six months.

That gives employers a fixed runway to redesign probation, review procedures and dismissal processes. This guide covers what changes, the transitional rule that catches December dismissals, and what a probation framework built for the new regime looks like.

The Change at a Glance

What Changes on 1 January 2027

The Employment Rights Act 2025 substitutes six months for two years in the qualifying period and removes the cap on the compensatory award, which stood at the lower of £123,543 or a year's gross pay. The government's implementation timeline confirms both for January 2027, and our six-month qualifying period guide covers the change itself in depth.

The practical effect is that the informal safety net many employers ran, addressing performance and fit problems by giving notice inside two years, closes. From six months onward, every dismissal needs a fair reason and a fair process that would stand up at tribunal.

The Transitional Rule Works on Termination Dates

The commencement regulations apply the new law to any dismissal whose effective date of termination falls on or after 1 January 2027, even where the dismissal was communicated earlier. A dismissal with notice given in December 2026 that expires in January is judged under the new rules.

There is a further wrinkle: where an employee is dismissed without notice, the law extends the effective date by the statutory minimum week for qualifying-period purposes. Marginal decisions therefore need making comfortably before the six-month mark, not at it, which in practice puts the real decision point near five months.

Why the 1 July 2026 Cohort Comes First

Employees hired on or before 1 July 2026 complete six months by the end of December, so they are protected from the first day the new regime operates. Hires after that date gain protection on their own six-month anniversaries through 2027.

If your probation framework was designed around a two-year fallback, this cohort is already moving through it. Probation reviews that drift, extensions agreed after the period expired and undocumented performance conversations were survivable under the old law; from January they are the raw material of claims with no compensation cap.

There Is No Statutory Probation Shortcut

Earlier plans for day-one protection came with a statutory probation period and a lighter-touch dismissal process, with nine months trailed as the preferred length. That design was dropped: the final Act contains no statutory probation mechanism, and the government has said it does not intend to consult further.

Probation therefore keeps the legal status it has always had, which is none for unfair dismissal purposes. A contractual probation period is a management tool; once an employee reaches six months, completing or failing probation gives the employer no shortcut around a fair reason and fair process.

Designing Probation for the New Regime

Acas's probation guidance maps the framework that now carries real weight: regular documented reviews with a final review before the period ends, clear contractual conditions for extension agreed before the original period expires, dismissal as a last resort with reasons in writing, and statutory notice observed.

Fit the timeline to the law: for a six-month probation, the final review needs to conclude by month five, so a marginal decision can be made and take effect before protection begins. Then train the managers who run reviews, because from January the review record is the evidence. Our induction and probation policies service builds the policy, review templates and letter suite as one consistent set.

Probation Policy and Procedure Writers

Policy Pros writes probation frameworks designed for the post-2026 rules: probation and induction policies, review procedures and templates, extension and outcome letters, and the disciplinary and capability procedures that take over at six months. Our HR policy writing service can update the whole set in one pass before January.

If your probation paperwork still assumes a two-year safety net, contact us for a free quote, or call 020 3951 2875.