With the upcoming changes to unfair dismissal rights under the Employment Rights Act 2025, many UK employers are asking whether they now need to extend probationary periods for employees.
Many SMEs have heard that unfair dismissal is becoming a “day one” right but this is not currently the case.
Here is what small and medium sized businesses actually need to know and why this change can actually create positive opportunities for employers to improve performance management, communication and employee engagement.
What Is the Current Law on Unfair Dismissal?
At present, employees generally need:
2 years’ continuous service
before they can bring an ordinary unfair dismissal claim against their employer.
This remains the current legal position in the UK.
Acas guidance:
https://www.acas.org.uk/dismissals/unfair-dismissal
What Is Changing Under the Employment Rights Act 2025?
The government plans to reduce the qualifying period for ordinary unfair dismissal claims from:
2 years to 6 months
Official government guidance:
https://www.business.gov.uk/campaign/employment-changes/employers/unfair-dismissal-rights/
Government factsheet:
https://assets.publishing.service.gov.uk/media/6a049a3d22977ebc82cb3f1a/unfair-dismissal-factsheet.pdf
The proposed implementation date is:
1 January 2027
Under the current proposals, employees would generally need six months’ service before gaining ordinary unfair dismissal protection.
Why Employers Are Talking About July 2026 Recruitment
The reason many HR Professionals are now focusing on recruitment from July 2026 onwards is because:
• an employee hired in July 2026 may reach six months’ service by January 2027
• meaning they could qualify for unfair dismissal protection once the reforms take effect
This has prompted many employers to start reviewing probationary period management now rather than waiting until 2027.
Do SMEs Need Longer Probationary Periods?
Not necessarily.
For many SMEs, a properly managed 3 month probationary period will still remain entirely appropriate for operational, junior and mid level roles.
In many positions, employers can usually assess:
• attendance
• reliability
• attitude
• communication
• behavioural fit
• and basic capability
within the first 12 weeks of employment.
For smaller businesses especially, longer probation periods can sometimes create unnecessary administration without adding significant value.
What matters most is not simply the length of probation. It is whether probation is:
• actively managed
• properly documented
• consistently reviewed
• and supported with clear feedback
Many SMEs may find that retaining a 3 month probationary period, alongside a clear contractual right to extend probation where necessary, remains the most practical and proportionate approach.
This allows employers to:
• address concerns early
• provide additional support or training where appropriate
• allow more time for assessment if improvement is being demonstrated
• and make fairer, more informed decisions where performance or suitability remains uncertain
For employers, the key focus should not simply be making probation longer, but ensuring probation periods are actively managed, properly documented and reviewed consistently.
When a 6 Month Probationary Period May Be More Appropriate
Longer probation periods may still be sensible for:
• senior managers
• leadership roles
• technical specialists
• sales positions with longer performance cycles
• regulated roles
• or positions involving significant responsibility or client relationships
In these types of roles, it can take longer to properly assess:
• leadership capability
• strategic thinking
• commercial performance
• relationship management
• and overall cultural fit
A 6 month probationary period can therefore provide employers with a more realistic timeframe to evaluate suitability, while ensuring probation processes are completed before or around the point employees may gain ordinary unfair dismissal protection under the upcoming reforms.
A Positive Opportunity for SMEs
While some businesses may initially see these changes as increasing risk, there is also a very positive side for employers.
The upcoming reforms encourage organisations to:
• improve communication
• strengthen management capability
• create clearer expectations
• support employee development earlier
• and build stronger workplace cultures
In practice, businesses with structured people management processes often experience:
• better employee engagement
• improved retention
• earlier identification of concerns
• stronger accountability
• and fewer formal employee relations issues overall
For many SMEs, this is an opportunity to move away from reactive people management and towards more proactive leadership and development.
Managing Performance Properly During Probation
One of the biggest mistakes SMEs make is waiting until the end of probation to raise concerns.
Performance management should begin early and remain consistent throughout employment.
Managers should:
• hold regular informal check ins
• give feedback little and often
• address concerns as they arise
• clearly explain expectations
• and document conversations appropriately
Employees should never be surprised at the outcome of a probation review meeting.
If performance concerns exist, employers should explain:
• what the issue is
• why it matters
• what improvement is required
• what support will be provided
• and when performance will be reviewed again
In many cases, employees improve significantly when expectations are communicated clearly and support is offered early.
Using HR Software to Support Probation Management
One of the simplest ways SMEs can strengthen probation and performance management processes is through effective use of HR software.
Modern HR systems can help businesses:
• schedule probation review meetings
• record one to one discussions
• document objectives and feedback
• track training and support provided
• store performance notes consistently
• and create clearer audit trails
This not only helps protect the business legally but also creates a more structured and supportive employee experience.
Employees benefit from:
• clearer communication
• regular feedback
• transparency around expectations
• and stronger development support
Managers also gain greater confidence in handling performance conversations consistently and fairly.
For growing SMEs especially, utilising HR software can significantly reduce administration while improving accountability and people management standards across the business.
Practical Tips for SMEs
Set Clear Objectives Early
Employees should understand:
• what success looks like
• required standards
• behaviours expected
• and key responsibilities
Vague expectations often create unnecessary performance issues.
Hold Regular Review Meetings
Rather than waiting until the end of probation, employers should schedule:
• an initial review
• a midpoint review
• and a final probation review
This creates structure and allows concerns to be addressed early.
Keep Brief Written Records
Managers do not need lengthy formal reports.
Simple notes confirming:
• discussions held
• support offered
• agreed actions
• and review dates
can make a significant difference if concerns later arise.
Offer Support Before Escalation
Performance issues are not always misconduct.
Sometimes employees need:
• additional training
• clearer instruction
• more supervision
• or reasonable adjustments
Early support often prevents larger employee relations issues later.
Extend Probation Where Appropriate
If there are mixed results or some improvement is being shown, extending probation may be more reasonable than making an immediate decision.
Employment contracts should clearly allow probation periods to be extended where necessary.
Final Thoughts
The proposed reduction in unfair dismissal qualifying service from two years to six months is an important employment law development for UK businesses.
However, SMEs do not necessarily need to panic or move every employee onto lengthy probationary periods.
For many organisations:
• a properly managed 3 month probation period will still work perfectly well
• while 6 month probation periods may be more appropriate for senior or specialist roles
The key difference going forward will be the quality of probation management, documentation and manager capability rather than simply making probation longer.
For many SMEs, this change is also an opportunity to strengthen leadership, improve communication and create more engaged and accountable workplace cultures.
At Craven Consultancy Services, we support SMEs with practical HR advice, HR software, probation management, manager training, employment contracts and compliant people management processes.
📧 [email protected]
🌐 https://cravenconsultancyservices.co.uk
