Unfair Dismissal After Six Months: How to Run Probation Periods Properly From 2027

From 1 January 2027, employees will be able to claim unfair dismissal after just six months' service, instead of two years. For small businesses, that turns probation from a formality into the most important part of employment. Here's how to set it up and run it properly.

What's changing

The Employment Rights Act 2025 makes three linked changes from 1 January 2027. First, the qualifying period for "ordinary" unfair dismissal falls from two years to six months. Anyone who already has six months' service on that date is protected straight away, which means anyone who joined on or before 1 July 2026.

Second, the cap on unfair dismissal compensation is removed. At the moment, awards are capped at the lower of £123,543 or a year's gross pay. From January there is no upper limit. Third, employees will be able to ask for written reasons for their dismissal after six months, rather than two years.

Some things don't change. Protection against discrimination, and against dismissal for reasons such as whistleblowing, pregnancy or raising a health and safety concern, already applies from day one, and still will.

Why probation matters more than ever

After six months, you'll need a fair reason to dismiss someone, such as capability or conduct, and you'll need to follow a fair process. The first six months are now your window to decide whether a new starter is right for the role, with much less risk.

According to the government, around 40% of businesses already use probation periods, and most are six months or less. The problem is that a probation period of six months now ends on exactly the day full protection begins. If you leave your decision until the last week, you've left yourself no room at all.

How long should probation be?

For most roles, a probation period of three months, with the option to extend it once, works well. It gives you time to see how someone performs, and still leaves time to extend, support them or make a decision well before the six months are up.

There are two things to watch. First, leave yourself a margin. The statutory minimum notice an employee is entitled to can count towards their length of service, even if you pay it in lieu, so a dismissal in the last week or two before six months could tip them over the line. Aim to make your final decision with at least a few weeks to spare.

Second, probation doesn't pause the clock. If you extend someone's probation past six months, they still gain unfair dismissal protection at six months, whatever their probation status.

Get your contracts right

Every employee's written statement of terms must already include details of any probation period, including how long it lasts and its conditions. Check that your contracts and offer letters state the length of probation, give you the right to extend it (and say for how long), set out any shorter notice period that applies during probation, and explain that you'll confirm in writing when someone has passed. If your offer letters and contracts say different things, update them now so they match.

Running probation properly: a simple timeline

• Day one. Explain the role, the standards you expect and how probation works. Agree three to five clear objectives and write them down.
• Week four. First review. What's going well? What needs to improve? What support or training do they need?
• Week eight. Second review. If there are concerns, be specific, explain what good looks like and agree a plan with a timescale.
• Week twelve. Final review. Confirm they've passed, extend probation with clear targets, or end their employment.

Keep a short note of each meeting and give the employee a copy. If you ever need to rely on your decision, these notes are your evidence. They're also good management: most people want to know how they're doing.

If it isn't working out

Raise concerns early and honestly. A new starter who doesn't know there's a problem can't fix it, and a problem left until week 23 leaves you with very few options.

If you decide to end someone's employment during probation, invite them to a meeting and explain your reasons clearly. Let them bring a colleague or trade union representative: it's good practice, and it may be a legal right if the meeting is about their conduct or performance. Confirm your decision and their notice in writing afterwards. Above all, make sure your reasons are genuine and well documented, because protection from discrimination applies from day one.

What about people who are already past six months?

Make a list of everyone who will have six months' service on 1 January 2027. If you have concerns about anyone's performance or conduct, deal with them now, fairly and through your normal procedures, rather than letting them drift into the new year.

Your probation checklist

• Review the probation period in your contracts and offer letters, and shorten it if needed
• Add a clear right to extend probation
• Diarise probation reviews for every new starter
• Use a simple review form and keep notes of every meeting
• Train your managers to give honest feedback early
• Check your disciplinary and capability procedures are up to date
• List everyone who will have six months' service on 1 January 2027

How Floreo HR can help

We can review your contracts and probation policy, give you simple review templates, and help your managers feel confident having honest conversations. Our free HR Health Check is a good place to start, and there's no pressure and no sales pitch. For the wider changes, see our guide to the Employment Rights Act 2025.

We support businesses across Hull, East Yorkshire, York, Leeds, Harrogate and Sheffield. Call 01482 765481 or get in touch.

This article is general guidance based on the government's published position as at October 2026. It isn't legal advice. Check the latest position on GOV.UK and Acas, or speak to us about your circumstances.