HR Solutions, New Deal for Working People: the importance of probation periods and how they may change in the future
Introduction
The landscape of employment law is poised for a significant transformation with the introduction of the Employment Rights Act 2025. This forthcoming legislation is set to revolutionise employment law by establishing a day one right to claim unfair dismissal and introduce a new statutory probation period.
This fundamental shift mandates that employers must become more vigilant than ever in managing all dismissal processes.
This significant change will have far reaching implications for employers, especially when it comes to managing probation periods, short service dismissals, and other critical employment decisions.
In this month’s Hot Topic, we consider these reforms and what they will mean to an employer and how existing practices will need to change to mitigate risk.
Understanding what is changing?
Before we consider the implications, we need to first understand what is currently in place and what is proposed.
The right to claim unfair dismissal
Current entitlement:
Generally, an employee must have been continuously employed for at least two years by the effective date of termination of their contract of employment to bring a claim of unfair dismissal at an employment tribunal.
How it could change:
The original Employment Rights Bill proposed giving all employees a right to protection from unfair dismissal from day one of employment, therefore abolishing the two year qualifying service. This was also a key commitment in the Labour Government’s election manifesto back in 2024.
As the Bill has progressed through Parliament, there have been many amendments made to the original Bill. Just last month, the House of Lords put forward to amend this reform. So rather than removing the qualifying service entirely, the Bill would be amended by shortening the length of qualifying service required to bring a claim from the current 2 years to just 6 months service.
However, even though this amendment was accepted, the Bill must return to the House of Commons, where final consideration of all amendments takes place. What we may therefore find, is that the Government, with its majority of 146 Members of Parliament, reinstates the original reform as was first set out when the Bill was first published.
This is quite possible, considering it would mean the Government are fulfilling their commitment to their own manifesto in which they sought election on. Either way, employees will no longer require two years’ service to bring a claim for unfair dismissal, and it will become either:
1) the legal right to claim unfair dismissal is from day 1 of their employment, and a new statutory probation period will be introduced, or
2) employees will be required to have 6 months service to bring a claim for unfair dismissal, which takes effect after an initial period of employment.
With Parliament now in recess for the Summer, we won’t know which position will be accepted into the final version of the Bill, which is expected around October/November.
New statutory probation period
Current entitlement:
At present, there is no statutory probation, it is a matter for each organisation to decide on whether to adopt such procedures. However, we do strongly advise in the use of probation periods because of how important it can be as a management tool as well as be a supporting mechanism for the employee during the early days of their career.
How it is changing:
The Bill introduces a new ‘statutory probation period’ (often referred to as an ‘initial period of employment’). During this period there will be a less onerous process that will have a lighter touch standard that will allow employers to be able to potentially fairly dismiss someone who is not right for the job. The government has indicated a preference for a nine-month period, during which a ‘lighter touch’ dismissal process will apply for reasons of conduct or capability only (not redundancy; these dismissals will have to ensure full fairness in the dismissal).
Extended the time limit to bring a tribunal claim
Current entitlement: A further significant reform that is not directly associated with probation periods but could have significant implications overall for an employer and that is to give employees longer in which they can lodge a tribunal claim for an unfair dismissal.
Currently, an employee generally has three months from the effective date of their termination of their contract of employment to bring a claim for unfair dismissal. It generally means that a claim must usually be presented within three months less one day.
How it is changing: The ERB is set to extend this timeframe to six months. This will be significant because the period of risk for an employer is longer.
The importance of probation periods
A probation period is a vital management tool serving as a critical assessment phase for both employers and new hires. For employers, they offer a vital opportunity to thoroughly evaluate an individual's skills, performance, attendance, verifying suitability beyond the recruitment process. This period allows for the identification of any mismatches in expectations or capabilities early on, enabling timely intervention through additional training and support, or, if necessary, a more straightforward termination of employment.
Crucially, probation periods also benefit the employee, providing them with a structured introduction to the role and company culture, enabling them to assess if the position aligns with their career aspirations and if the workplace environment is a good fit.
By fostering open communication and regular feedback, well-managed probation periods lay the foundation for a successful and mutually beneficial long-term employment relationship, ultimately contributing to higher retention rates and a more productive workforce.
Probation periods are an ideal time to nip any potential problems in the bud before they become disciplinary or longer-term unsatisfactory performance issues with most probationary periods being between three and six months.
If you are to end an employee’s employment during or on completion of the probation, having used a probation period effectively will enable you to demonstrate you have dismissed fairly. Many employers already operate a probation period, but if your organisation does not currently operate one, then now is an important time to consider introducing, in readiness for the reforms coming into force in 2027.
Implications for employers
Considering these impending changes, the implications for employers will be major. The shift to a day one right to claim unfair dismissal underscores the critical need for increased vigilance, robust documentation, and a thorough understanding of fair dismissal principles from the moment an individual commences employment. Here are our thoughts on how these reforms are likely to impact an employer:
Increased risk and scrutiny for employers
Employers will face a heightened risk of unfair dismissal claims from new hires due to the removal of the two-year qualifying period and a proposed extension of the tribunal claim time limit from three to six months.
Enhanced hiring and onboarding processes
Employers will need to significantly strengthen their recruitment processes by making more thorough hiring decisions such as through using more robust background checks, running multiple interview stages, and detailed skills assessments.
Adapting policies and training
Employers will need to review and update their disciplinary and capability policies to ensure they are fair and legally compliant for all employees, regardless of their length of service. Plus, introduce a new policy and framework for managing probation periods that runs in alignment with the statutory ‘initial period of employment’.
Short service dismissals:
The ability to dismiss employees with short service without extensive justification will be significantly curtailed. Employers must ensure that even short-term employees are dismissed fairly and demonstrably, based on valid reasons and proper procedures.
Increased bureaucracy and employer responsibility
These changes are likely to result in more formal processes and increased documentation requirements, leading to greater bureaucracy. The risk of taking on a new employee will shift more towards the employer, demanding greater diligence in both hiring and early performance management to ensure a good fit for both the role and the company culture from the very first day.
Timescales for change
As it stands, the Employment Rights Bill is currently in the House but is expected to be passed to the House of Commons on parliament’s return from the summer recess, but then it must go back to the House of Lords. There could be a ‘ping pong’ between the two Houses before it is finally agreed upon and then passed for being given Royal Assent (i.e. to be passed as an Act of Law). It is expected at present, for the Bill to become an Act of law around October/November 2025.
Regarding the reforms to the unfair dismissal rules and the introduction of a statutory probation period, the Government have indicated the following timeline:
· Summer/Autumn 2025: the Government will open a public consultation on the day 1 right (or 6month, if the amendment is accepted) and the introduction of a statutory probation period. We will inform you once this opens in our monthly newsletter.
· 2027: The change in unfair dismissal rules and a new probation process is expected to come into effect.
Preparing for change
Many of the details for how these reforms will operate such as the exact length of the statutory probation period, the precise ‘lighter touch’ dismissal process, and the compensation regime, are still subject to a public consultation.
We need further Regulations drafted to provide us with further detail about the application of the law, and Acas will need to update existing, and create new accompanying Codes of Practice to guide employers.
Whilst we await the finer detail, employers can start preparing for this change, here is our list of 10 key activities to do in the lead up to these reforms coming into force:
1. Review and update recruitment processes
2. Revamp onboarding and induction programs
3. Formalise and document performance management
4. Update disciplinary and capability policies and introduce a probation policy
5. Provide extensive manager training
6. Align contractual probationary periods with statutory framework
7. Strengthen documentation protocols for probationary periods
8. Understand the ‘lighter touch’ dismissal for probationers (and its limits)
9. Assess and mitigate risk of claims
10. Foster a culture of open communication and support
Further Information
In our article ‘Employment Rights Bill – preparing for change’ you will find our top ten tips for how you can get your business ready for all the reforms expected.
Keep an eye out for our continued updates on the Employment Rights Bill. We continue to share news developments in our monthly newsletters, and we share with you at the end of each month, what new templates and articles have been added, or which existing ones have been revised – all for legal compliance.
Key tools and advice available on the Knowledge Base include:
1. We continue to develop template forms for you to carry out your own impact assessments of the various reforms. We currently have available:
a. FORM_ADM05 Impact Assessment – fire and rehire
b. FORM_ADM05 Impact Assessment – flexible working
c. FORM_ADM05 Impact Assessment - harassment
d. FORM_ADM05 Impact Assessment - SSP
e. FORM_ADM05 Impact Assessment – tips and gratuities
f. FORM_ADM05 Impact Assessment – tribunal time limits
2. Our article ‘Employment law timetable’ sets out useful information in chronological order of the legislation that is due in. Where we do not have precise implementation date, we provide an approximate timeframe to help you to continue plan.
3. You will find on our home page all new articles that have been added in the previous two weeks. This is a helpful visual when on logging onto the Knowledge Base.
4. Check out our webinar calendar on our events page, as we continue to provide updates on the ERB through our webinar programme.
Next month’s Hot Topic
In September’s Hot Topic, which will be published in the first week of September, we will be discussing the four primary areas of discrimination: direct discrimination, indirect discrimination, harassment, and victimisation.
We will explore these concepts and their legal implications, consider the practical strategies to mitigate tribunal risk and how to improve equality, diversity and inclusion in your workplace.
Our accompanying webinar for this Hot Topic will be held on Thursday September 11 2025, and you can register for this event here.