From 1 January 2027, one of the most significant changes to employment law in years will take effect, giving employees protection against ordinary unfair dismissal after just six months of service, rather than two years. For employers across Cumbria, this could fundamentally change how they manage new employees, probation periods and performance concerns.

For many businesses, probation periods are a familiar part of taking on new staff.

An employee joins the company, settles into their role and undergoes an initial period during which their performance and suitability can be assessed.

But what happens when an employee isn’t performing as expected?

Perhaps a manager has concerns about their performance but hasn’t formally documented them. Maybe a probation review has been postponed, or an employee has been given additional time to improve without any clear objectives.

Situations like these can be challenging for employers. And under the Employment Rights Act 2025, the consequences of getting them wrong could become considerably more significant.

From 1 January 2027, employees will generally need just six months of qualifying service to bring a claim for ordinary unfair dismissal.

With the changes approaching, employers should be asking an important question:

Are our current probation and performance management procedures robust enough for the new rules?

1. What’s changing to unfair dismissal rights?

Under the current rules, employees generally need two years of continuous service before they can bring a claim for ordinary unfair dismissal.

This qualifying period will reduce to just six months from 1 January 2027.

Importantly, the changes will not apply only to people recruited after January.

Employees who already have at least six months of qualifying service when the new rules take effect will also gain protection.

For example, an employee who joined a business in July 2026 could have six months of service by 1 January 2027 and become eligible to bring an ordinary unfair dismissal claim, despite having worked for the organisation for considerably less than two years.

The new rules will apply to dismissals where the effective date of termination falls on or after 1 January 2027.

This means employers must also consider situations where notice is given before January but employment ends after the changes take effect.

The legislation does not introduce general day-one protection against ordinary unfair dismissal. However, it significantly shortens the period before employees become eligible to challenge an unfair dismissal.

Existing protections against discrimination and certain automatically unfair reasons for dismissal continue to apply regardless of length of service.

For employers, the practical impact is clear: fair and effective performance management will become important much earlier in the employment relationship.

2. What does this mean for probation periods?

Probation periods are commonly used to assess whether a new employee is suitable for their role.

They provide an opportunity to establish expectations, review performance, identify training needs and address concerns before confirming an employee in their position.

However, it is important to understand that the Employment Rights Act does not change the law governing probation periods themselves.

Employers can still use probation periods, and there is no statutory requirement for them to be a particular length.

What is changing is the point at which employees become eligible to claim ordinary unfair dismissal.

This distinction matters.

A business operating a six-month probation period should not assume that an employee has fewer legal protections simply because their probation has not been formally completed.

Equally, extending someone’s probation beyond six months does not postpone their statutory unfair dismissal rights.

Employers will still be able to dismiss employees for legitimate reasons, including poor performance, but where an employee has the necessary qualifying service, the employer must be able to demonstrate a potentially fair reason and that it acted reasonably in the circumstances, including following an appropriate procedure.

For businesses that currently rely on informal probation reviews or make decisions towards the end of a lengthy probation period, it may be time to reassess how those processes operate.

3. Why poor performance management could become a bigger risk

Consider a business that recruits a new employee into a customer-facing role.

During their first few months, the employee struggles to meet expectations.

Their manager provides verbal feedback, but little is documented. Formal reviews are repeatedly postponed, and the employee is never given clear, measurable objectives for improvement.

After seven months, the employer decides the individual isn’t suitable and terminates their employment.

Under the new rules, that employee could potentially challenge the dismissal through an Employment Tribunal.

The employer may have genuine and legitimate concerns about performance. However, if those concerns have not been properly communicated, documented or addressed through a fair process, defending the decision could become more difficult.

This does not mean every performance-related dismissal will be unfair.

It means employers need to consider not only whether a dismissal is justified, but also how the decision has been reached.

Good performance management isn’t simply about identifying when someone is underperforming.

It involves setting reasonable expectations, providing appropriate support, addressing concerns promptly and maintaining accurate records.

For SMEs where business owners or departmental managers handle HR responsibilities alongside their usual roles, ensuring these processes are followed consistently can be particularly challenging.

A missed review or poorly documented decision today could create a much bigger issue several months down the line.

4. The financial implications of unfair dismissal claims are also changing

The reduced qualifying period isn’t the only significant reform taking effect in January.

The Employment Rights Act 2025 will also remove the statutory cap on compensatory awards for ordinary unfair dismissal.

Currently, compensation is generally subject to a statutory financial limit.

From 1 January 2027, that cap will be removed, although compensation will continue to be assessed according to the established rules, including the claimant’s actual and projected financial losses.

This does not mean every successful claim will result in a large payout.

However, it does increase the potential financial exposure in cases involving substantial losses.

For employers, the consequences of an employment dispute can also extend beyond compensation.

Managing a claim can take time away from running the business, create additional costs and place pressure on managers and employees.

When combined with the reduction in the qualifying period, the removal of the compensation cap makes it particularly important for businesses to understand their responsibilities and take appropriate advice when handling difficult employment decisions.

5. Is your business ready for the six-month rule?

With less than two months remaining before the changes take effect, employers should consider whether their existing recruitment, probation and performance management arrangements remain appropriate.

Some important questions include:

• Probation procedures: Are your probation periods and review processes clearly defined, consistent and appropriate for each role?
• Performance expectations: Do employees understand what is expected of them, and are concerns addressed promptly?
• Manager responsibilities: Do managers know how to handle performance issues, conduct reviews and follow the correct procedures?
• Documentation: Are performance discussions, objectives, support provided and employment decisions properly recorded?
• Dismissal procedures: Are your existing policies aligned with the upcoming unfair dismissal changes, and do managers know when to seek specialist advice?

There is no single approach that will suit every organisation.

A small hospitality business, a growing professional services company and a large manufacturing employer may have very different workforce arrangements and management structures.

What matters is having processes that are appropriate, fair and consistently applied.

For employers who are unsure whether their existing procedures are suitable, reviewing them with an experienced HR or employment law adviser before January could help identify issues that might otherwise go unnoticed.

Don’t wait until January to review your procedures

The reduction in the unfair dismissal qualifying period is one of several significant Employment Rights Act reforms arriving on 1 January 2027.

Further changes to employment rights are expected throughout 2027, creating additional responsibilities for employers.

For businesses across Cumbria, keeping up with these developments while managing staff, customers and the everyday demands of running an organisation can be difficult.

But waiting until an employment issue arises is not always the best time to discover that a procedure is outdated or a decision has been handled incorrectly.

Cumbria Chamber of Commerce can help your business prepare.

Existing Chamber members have access to specialist HR and employment law advice through Chamber Protect, delivered by Quest, alongside a range of additional business support benefits.

For businesses that aren’t currently Chamber members, we can help you explore the support available and how Chamber membership could help protect your business.

Whether you’re concerned about probation periods, managing employee performance, dismissal procedures or the wider Employment Rights Act changes, seeking expert guidance now could help you approach January with greater confidence.

Don’t leave your business exposed to avoidable employment law risks.

Visit our Employment Rights Act information page to understand the wider changes and complete the enquiry form to request expert support.

Get Expert Help Preparing Your Business

This article provides general information about forthcoming employment law changes and should not be treated as legal advice. Employers should obtain advice appropriate to their individual circumstances.