Time to assess new hires is shrinking to 6 months

Many SME owners are currently focused on rising employment costs, evolving workplace rights and ongoing economic pressures. However, the employment law team at Allin1 Advisory wishes to remind SMEs that major employment law reforms on the horizon could catch many employers off guard if they have not already prepared.

From 1 January 2027, the qualifying period for bringing an ordinary unfair dismissal claim has reduced from two years’ service to just six months, significantly shortening the timeframe employers have to assess new recruits and make decisions regarding their ongoing employment.

Employment lawyers are warning that many SMEs remain unaware of the practical implications of the change, particularly where they rely on informal probation processes, limited HR support, or inconsistent performance management procedures.

A significant shift for employers

For many years, employers have generally had a two-year qualifying period before an employee could bring an ordinary unfair dismissal claim. While employees have always benefited from day-one rights in areas such as discrimination and whistleblowing, the two-year threshold has provided businesses with a relatively lengthy period to assess whether a new hire is the right fit. They can place them on performance reviews, extend probation periods and limit salary increases and benefits until they are confident. A decision must be made immediately as six months goes quickly.

“The reduction to six months represents one of the most significant changes to unfair dismissal law in recent years,” says Allin1 Advisory. “Many employers have become accustomed to having a considerable period of time to manage performance concerns or determine suitability. That window is about to become much smaller.”

Why SMEs may be particularly vulnerable

While larger organisations often have dedicated HR departments and structured review processes, SMEs frequently rely on line managers to oversee recruitment, performance management and dismissal decisions alongside their operational responsibilities. We regularly see situations where concerns about performance arise early in employment but are not formally addressed or documented. Founders are often very busy, distracted and six months flies by before they have covered training, performance reviews and probation checks. Under the new regime, delaying those conversations could leave employers exposed to unfair dismissal claims much sooner than they expect. The shorter qualifying period means businesses will need to identify concerns quickly, take appropriate action and maintain clear records from the outset.

Probation periods need more than a tick-box approach

One of the most common misconceptions among employers is that probation periods provide automatic protection from legal challenge. In reality, probationary periods are contractual arrangements rather than legal exemptions. Once unfair dismissal protection applies, employers must still be able to demonstrate a fair reason for dismissal and show that a reasonable process was followed. Employers should review their probation procedures now and consider whether they are fit for purpose ahead of 2027. Key questions businesses should be asking include:

– Are probation reviews taking place regularly and within the six-month period?

– Are expectations and objectives clearly documented?

– Are concerns raised promptly with employees, by whom and how?

– Is support provided where improvements are needed and how is this recorded?

– Are data protection policies and processes robust and workable?

– Are managers keeping appropriate records?

If a probation review only happens at the end of six months, employers will find they have left matters too late.

The hidden notice period trap

Another issue many employers may overlook is the impact of statutory notice on qualifying service calculations. In some cases, an employee’s service for unfair dismissal purposes can extend beyond the date on which notice is given, meaning the qualifying period may be longer than expected. Employers should therefore audit their notice periods, update contracts where necessary and ensure that service calculations reflect any statutory notice. Taking these steps now will reduce the risk of unexpected claims when the six-month threshold takes effect.

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