Are Your HR Processes Ready for the Unfair Dismissal Changes?

With significant changes to unfair dismissal rights approaching, employers should start preparing now. From 1 January 2027, new rules will change how businesses manage recruitment, probation and employee performance. We explain what is changing and the practical steps you can take to prepare.

What’s changing to the unfair dismissal rules?

A six-month qualifying period

The current two-year qualifying period for ordinary unfair dismissal protection will be reduced to six months. Employees who have completed six months of service by 1 January 2027 will gain these rights, including existing employees and those recruited from 1 July 2026.

Removal of the compensation cap

The cap on the compensatory award for ordinary unfair dismissal claims will be removed, potentially increasing the financial exposure for employers.

These changes mean employers will have less time to assess a new employee’s suitability and will need to take a more structured approach to performance management from day one.

What are the potential implications for employers?

• Financial risk: Poorly managed performance issues and unfair dismissal claims could lead to significant costs.
• Employment Tribunal claims: Employers may face increased exposure to claims.
• Management time: Addressing performance concerns, maintaining records and managing formal processes can place additional demands on managers.
• Reputational damage: Dismissal disputes can affect employee trust and your reputation as an employer.

Why the first six months matter

The recruitment, onboarding and probation stages will become increasingly important.

Recruitment: Use a fair, consistent selection process to assess candidates against the requirements of the role.

Onboarding: Provide a structured induction, appropriate training and clear expectations from the start.

Probation: Set measurable objectives, schedule regular reviews and address concerns promptly. Employees should receive constructive feedback, appropriate support and a reasonable opportunity to improve. Keep accurate records of discussions, decisions and actions taken.

Can you still dismiss someone during probation?

Yes, but probation does not remove the need to act fairly or follow appropriate procedures. Employers should not rely on the probationary period as a reason to overlook performance management or delay addressing concerns.

Once an employee qualifies for ordinary unfair dismissal protection, they may challenge their dismissal at an Employment Tribunal.

How can HR software help?

Managing probation periods effectively can be challenging, particularly when multiple employees have different review dates and managers are responsible for completing check-ins.

HR software such as oneHR can help businesses stay organised and maintain oversight through two useful features:

• Probation Tracker: Helps you manage the entire probation process by recording start, review and end dates, with reminders ahead of key milestones. You can monitor employees currently on probation, record outcomes and store supporting documents, helping you maintain a consistent, organised and auditable process.
• Probation Report: Provides visibility of employees on probation and highlights missed milestones, helping HR teams and managers identify overdue reviews and take action before issues are overlooked.

Together, these features support a more consistent approach to probation management, helping businesses keep track of important deadlines and maintain better records throughout the employee journey.

What should employers do before January 2027?

To prepare for the changes, employers should:

• Review employment contracts, probation policies, notice periods and capability procedures.
• Check that recruitment and onboarding processes are effective and consistent.
• Train managers to set objectives, provide feedback and manage underperformance.
• Schedule probation reviews and document feedback, support and agreed actions.
• Review performance concerns promptly and seek appropriate HR advice before making dismissal decisions.

The bottom line

The upcoming changes make effective probation management more important than ever. By strengthening recruitment, supporting managers and using HR software to track reviews and missed milestones, employers can take a more proactive approach to performance management and reduce the risk of problems being overlooked.

Now is the time to review your processes and make sure your business is ready for January 2027.

Book a demo to see how oneHR can help you manage your employees’ probation periods.

Call: 0330 107 1037

Email: contact@onehrsoftware.com

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