“We’ll just terminate their employment at the end of probation if it doesn’t work out.”
It’s a phrase many business owners and managers have relied on, often without fully appreciating the management responsibilities that sit alongside it.
With the Employment Rights Act 2025 now passed, organisations need to rethink how they recruit, manage and support new starters from day one.
The Act will significantly change how employers approach probationary periods, performance management and employee documentation. For many businesses, this will require a shift from reactive management to proactive people management.
Why This Matters
Traditionally, employers have benefited from a two-year qualifying period before most employees could bring a claim for ordinary unfair dismissal.The Employment Rights Act 2025 reduces this qualifying period to six months, taking effect from 1 January 2027. Employers will no longer have the comfort of two years to assess, manage or move on a new hire; protection will now apply much earlier in the employment relationship.
Critically, the Act also removes the cap on unfair dismissal compensation entirely. Currently, awards are limited to the lower of 52 weeks’ pay or £118,223. From January 2027, there will be no upper limit, meaning the financial stakes of getting a dismissal wrong are significantly higher.
It is also worth noting that the change applies to employees already in post, not just new starters. Anyone hired from around the end of June 2026 onwards will reach their six-month qualifying point on or after 1 January 2027, gaining protection from that point rather than from day one of the new regime, meaning employers need to be thinking about this now, not next year.
This means employers need to demonstrate fair processes, effective management and appropriate decision-making much earlier in an employee’s journey.
Organisations that currently rely on informal probationary processes or standard six-month probation periods that run right up to the qualifying threshold should review these arrangements as a matter of priority.
Probation Should Be a Process, Not a Date
One of the most common mistakes we see is treating probation as a single event.
A six-month probation period is agreed, a diary reminder is set for month six, and very little happens in between.
By the time concerns are identified and addressed, opportunities to support improvement may already have been missed.
With the qualifying period reducing to six months, many employers will also need to consider whether their standard probation length remains appropriate, or whether a shorter, more actively managed period gives them greater confidence before protection kicks in.
Effective probation management should include:
- Clear expectations from day one
- Structured induction and onboarding
- Regular documented review meetings
- Ongoing feedback and coaching
- Early intervention where concerns arise
- Clear objectives and measurable outcomes
It is also worth noting that a contractual probation period does not, in itself, create any additional legal rights for the employer. What matters is whether a fair and documented process has been followed.
When managed properly, probation is not about finding reasons to dismiss people. It is about giving individuals the best possible opportunity to succeed and ensuring employers have confidence in their recruitment decisions.
The Role of Managers Has Never Been More Important
Many managers are promoted because they are technically excellent at their role.
Managing people effectively, however, requires a distinct set of skills, many of which are rarely developed through technical roles alone.
Difficult conversations, performance management, feedback delivery and documentation are areas where managers often receive little formal training.
With the Employment Rights Act 2025 changes taking effect in January 2027, these skills are no longer a nice-to-have, they are essential.
Managers need confidence to:
- Set clear expectations
- Hold regular performance conversations
- Address concerns promptly
- Document discussions appropriately
- Support development and improvement
- Escalate issues where necessary
Avoiding difficult conversations until the end of a probation period is never beneficial for either the employer or the employee.
Documentation: The Forgotten Safety Net
Good documentation is often the difference between demonstrating a fair process and struggling to evidence what happened.
Review meetings, objectives, feedback discussions, support provided and agreed actions should all be recorded consistently.
This not only protects the organisation but also creates clarity for employees, ensuring everyone understands expectations and progress throughout the probationary period.
Where concerns are not documented, an employee’s account of events may carry more weight than an undocumented managerial recollection, particularly in early conciliation or tribunal proceedings.
In many cases, robust documentation helps resolve issues long before formal action becomes necessary.
A Culture Shift Towards Better People Management
Whilst some organisations may view these changes as an additional compliance burden, there is another way to look at them.
Businesses that invest in effective onboarding, manager capability and employee development typically experience:
- Improved retention
- Higher engagement
- Better performance
- Reduced recruitment costs
- Stronger workplace cultures
- Reduced exposure to early employment tribunal claims and, given the removal of the compensation cap, the potentially significant costs that now come with them
Ultimately, good people management is not just about reducing legal risk. It is about creating an environment where people can perform at their best.
How arlo Can Help
At arlo consultancy services, we believe that HR should be practical, commercially focused and tailored to the realities of running a business.
Our HR team can support organisations with:
- Reviewing probation and onboarding processes
- Updating contracts of employment and employee handbooks
- Developing performance management frameworks
- Manager training and coaching
- Employee relations support
- HR audits and compliance reviews
- Retained HR support services
Whether you need assistance with a specific challenge or a complete review of your people processes, our team can help ensure your organisation is prepared for the changes ahead.
Looking Ahead
The employment landscape has changed, and organisations that prepare early will be best placed to adapt successfully.
With January 2027 closer than it may feel, now is the time to review your probation processes, strengthen manager capability and ensure your HR documentation supports both compliance and good people management.
By taking proactive steps today, businesses can improve employee experience, reduce organisational risk and create stronger foundations for future growth.
When it comes to managing people, prevention will always be more effective than reaction.
Our experts Thoughts
Donna
What these changes really tell us is that there’s no longer any room for a passive approach to managing people. Employers who’ve relied on time as a safety net are going to find that net has gone. But honestly, the businesses I work with that manage this well aren’t doing it because of legislation, they’re doing it because they genuinely care about getting the right people in and giving them a fair chance to succeed. The law is just catching up with what good looks like.
