Unfair Dismissal Qualifying Period Cut to Six Months: 2027 Employer Guide

The Employment Rights Act 2025 reduces the service threshold for ordinary unfair dismissal claims from two years to six months, with commencement expected in January 2027.

The change strips out the long buffer period that previously allowed employers to part ways with underperforming staff without triggering tribunal exposure. From the commencement date, employees in their seventh month of service can bring an unfair dismissal claim and an employer needs a fair reason and a fair procedure to defend it.

This is the single most consequential employment law change for SME hiring and performance management in a decade. It sits alongside the January 2027 fire and rehire restrictions and the guaranteed-hours regime for zero-hours workers, and is the change that touches every employer regardless of sector or size.

What the Old Rule Said

Under the Employment Rights Act 1996, section 108, an employee needed two years' continuous service before they could bring an ordinary unfair dismissal claim. Below the two-year threshold, an employer could dismiss for almost any reason without facing an unfair dismissal claim, provided the reason was not automatically unfair (such as pregnancy, whistleblowing or trade union activity) and provided the dismissal was not discriminatory.

In practice, the two-year window functioned as an informal probationary safety net. Performance issues, cultural fit problems and capability concerns could be addressed by giving notice, with no requirement to follow a procedure that would stand up in tribunal.

The ERA 2025 reduction closes that window from two years to six months. The procedural shortcut that ran for the back end of year one and the whole of year two disappears.

What the New Rule Says

From the commencement date, an employee can bring an ordinary unfair dismissal claim once they have completed six months' continuous service. The employer must show:

A potentially fair reason for dismissal under the five statutory categories: capability, conduct, redundancy, illegality, or some other substantial reason.
That the decision to dismiss was reasonable in the circumstances, including the size and administrative resources of the employer.
That a fair procedure was followed, including investigation, notification, the right to be accompanied, the right to respond and the right of appeal.

The familiar ACAS Code of Practice on Disciplinary and Grievance Procedures remains the procedural benchmark, and a failure to follow it can result in an uplift of up to 25% on any compensatory award.

Automatically unfair dismissal grounds and day-one protections remain unchanged. The change is to ordinary unfair dismissal only.

Statutory Probationary Period

The Act provides for a statutory probationary period during which a lighter-touch dismissal procedure can be used. The length of the statutory probation is being set in secondary regulations and is expected to be in the range of six to nine months.

The lighter-touch procedure does not remove the right to claim. It modifies the procedural expectations that apply during the probation. The current direction of travel from the Department for Business and Trade is that the lighter-touch procedure will require:

A meeting with the employee at which the concerns are explained
The right to be accompanied at that meeting
A written decision and a right of appeal

Employers should not assume the lighter-touch procedure means dismissal can be done by email at the end of a bad week. It is a procedurally lighter version of a fair process, not an absence of process.

The detail of the statutory probation period is being finalised in regulations, including the maximum length, whether it can be extended by agreement, and what reasons can be relied on within it. Confirm the final position before relying on any specific point.

What Has to Change in Your Business

Recruitment Decisions Become Sharper

The cost of a wrong hire used to play out over a long, low-risk window. From January 2027, a wrong hire that has to be exited at month seven carries tribunal risk and procedural cost.

Employers should expect to invest more at the recruitment stage: clearer job specifications, structured interviews, reference checks taken seriously, and where appropriate, paid trial periods or assessment exercises. The downstream cost of fixing a recruitment mistake has gone up.

Probation Periods Need a Rewrite

Most employee handbooks and contracts include a probation clause that mirrors the old two-year window: three or six months of probation, with an extension option and a simple notice-out at the end. From January 2027, that approach is exposed.

Contracts and the induction and probation period policy need to:

Align with the statutory probation length once it is set in regulations
Specify the procedural steps that will be followed for a probation failure
Capture the right to be accompanied and the right of appeal
Set out clear performance measures so that any decision can be evidenced against pre-stated expectations

Performance Management from Day One

The buffer that allowed underperformance to be addressed informally for the first two years is gone. Managers need to be having documented performance conversations from week one, not from month eighteen.

This is more a change in management discipline than a change in policy text. Practical implications:

Probation reviews need to be scheduled, documented and acted on, not skipped
Concerns need to be put in writing as they arise, with clear expectations and timelines
The performance appraisal policy needs to bed in earlier in the employment relationship
Line managers need training on how to have early, documented performance conversations without escalating them prematurely

Disciplinary and Capability Procedures

The disciplinary policy and the underperformance policy need to be reviewed against the new threshold. Two specific points:

The procedures must be capable of being run within the statutory probation window. If a typical capability process takes nine months from informal warning to dismissal, that is not workable in a six-month probation. Procedures need to be tightened or accelerated, without sacrificing fairness.
The procedures must apply to short-service employees. Where existing policies say a process only applies after probation or after a year, the cut-off needs to be revisited.

Tribunal Exposure

The compensatory award for unfair dismissal is the lower of 52 weeks' pay or the statutory cap (currently set under the annual increase of limits order), plus a basic award based on age and length of service.

Below six months' service, the only routes to a tribunal will continue to be automatically unfair grounds (whistleblowing, health and safety, pregnancy, trade union activity and similar) and discrimination claims under the Equality Act 2010.

From six months onward, ordinary unfair dismissal is in play. Employers should expect an increase in:

Tribunal claims from employees dismissed in months seven to twelve
Settlement agreement requests at the point of exit
ACAS Early Conciliation contacts
Subject access requests as part of pre-claim preparation

The compounding factor is the reduction in the period employees need to be employed before they can bring a claim, combined with the cultural shift toward earlier challenge.

How This Interacts with Other 2026 and 2027 Changes

The six-month qualifying period does not arrive in isolation. The 2026 and 2027 reforms layer together in ways that change the operating model:

Day-one family leave and SSP from April 2026. See the April 2026 employer checklist, the day-one family leave guide and the day-one SSP guide. These changes increase the cost of churn during the probation window because new starters are accruing benefits from week one.
Fire and rehire restrictions from January 2027. See the fire and rehire employer guide. The combination means that variations to contracts and dismissals both become harder to defend, narrowing the routes by which employers can adjust the workforce.
Guaranteed-hours regime for zero-hours workers. See the zero-hours January 2027 guide. Workers who acquire employee status through a guaranteed-hours offer also acquire ordinary unfair dismissal protection at six months.
Fair Work Agency enforcement. See the Fair Work Agency guide. The Agency does not enforce unfair dismissal directly, but it will be tracking sector-level patterns and using its powers where systemic non-compliance is identified.

What Employers Should Do Now

Audit your probation framework. Pull the probation clause from your standard contract and the probation section of your employee handbook. Map the procedural steps against what a lighter-touch dismissal procedure is likely to require.
Tighten the recruitment process. Structured interviews, role-relevant assessments and rigorous reference checks reduce the chance of a wrong hire becoming a tribunal case at month seven.
Schedule the first three probation reviews. Diary the one-month, three-month and end-of-probation reviews for every new starter. Train managers to hold them, document the outcome and act on concerns before they crystallise.
Rewrite the probation review template. The template should capture pre-stated performance measures, what good looks like, where the employee is against each measure, and the consequence of not meeting them within a defined timeframe.
Train line managers. The day-to-day decisions sit with line managers. They need to know what an early, documented performance conversation looks like, when to escalate, and what the procedural expectations are for a probation failure.
Review the disciplinary, capability and underperformance procedures. Confirm each procedure can be run, fairly, within the statutory probation window. Tighten any procedure that cannot.
Update contracts. The standard contract needs revised probation language, an updated dismissal clause and clear cross-references to the relevant procedures.
Update the handbook. The handbook needs aligned text on probation, performance management, capability and disciplinary process.
Brief HR and managers on the change. The cultural shift from a two-year buffer to a six-month buffer is the hardest part. Managers who have always relied on the long window to defer difficult conversations will need active support to adjust.
Watch the regulations. The statutory probation length, the modified procedural requirements and the commencement date are being set in secondary regulations. Confirm the final position before going live with redrafted documents.

Common Misconceptions

"Six months means probation is six months." Not necessarily. The six-month figure is the unfair dismissal qualifying period. The statutory probation length is being set separately in regulations and is expected to be in the range of six to nine months.
"We can just extend probation to twelve months." Contracts can include a contractual probation period, but unfair dismissal protection still crystallises at six months' service regardless of what the contract says. The statutory probation is a procedural concession, not a delay in the right.
"This only applies to new hires after January 2027." The change applies to all employees. An employee who reaches six months' service on or after the commencement date can bring a claim. The change is not limited to those hired after commencement.
"Below six months we can dismiss for any reason." Automatically unfair grounds and discrimination claims have always been available from day one and continue to be. Short-service does not mean no-risk.

Sector Notes

Professional Services

Professional services firms with structured graduate and trainee programmes already operate with documented review cycles. The main change is procedural: the end-of-probation decision needs a defensible record and the right to be accompanied at the decision meeting.

Retail and Hospitality

Sectors with high churn during the first year are the most exposed. The cost of a six-month exit is now a real procedural cost, not just a notice period.

Operators should expect to invest in probation review discipline and line manager training as a baseline.

Care

Care providers running through registered manager structures will find the probation review burden is operationally significant given carer headcount. Standardising probation review templates and rolling them through scheduling systems is a sensible step.

Construction and Trades

Project-based hiring patterns mean a high volume of short-service exits. Where exits are by genuine end of fixed-term contract the unfair dismissal risk is lower, but ending a fixed-term contract early or not renewing it can still trigger a claim once six months has passed.

Settlement Agreements

Settlement agreements remain a route to resolve disputed exits and continue to require independent legal advice for the employee under the Employment Rights Act 1996, section 203.

The volume of settlement agreement requests is likely to rise from January 2027 as employees in months seven to twelve gain leverage. Employers should review their legal document templates and the standard form of settlement agreement to confirm they are fit for purpose.

How Policy Pros Can Help

Policy Pros writes the HR policies and procedures that need updating before January 2027, including probation policies, performance management procedures, capability procedures, disciplinary procedures and the line manager guidance documents that translate the new rules into day-to-day decisions.

We can also review existing contracts of employment and produce updated versions that reflect the new six-month threshold and the statutory probation framework. Our policy review service can audit your current documentation against the new framework on a fixed-price basis.

For broader Employment Rights Act 2025 readiness, see our ERA 2025 timeline summary, our 6 April 2026 employer checklist, our January 2027 fire and rehire guide and our zero-hours January 2027 guide.