Incoming changes to the Employment Rights Act (ERA) and the introduction of the six-month unfair dismissal protection rule will impact businesses sooner than they think. So, what do business leaders need to know?

The new six-month rule

Until now, employees generally needed two years’ continuous service to claim ordinary unfair dismissal. Once new ERA provisions are enforced from January 2027, employees will qualify for unfair dismissal protection after just six months’ service. Backdated, this includes workers whose continuous service began after July 1st, as well as existing employees with at least six months’ service.

Most HR professionals are abreast of the new rules and considering them when hiring. Yet many line managers still view hiring as filling a gap quickly, unaware of the risks associated with recruiting the wrong person. With less time to assess whether a new hire is working out and without robust recruitment and management processes in place, businesses risk high costs and HR challenges.

How will this affect businesses?

Many employers use 3-6 month probation periods as the primary assessment tool to highlight issues and manage challenges over time. Under the new rules, this timeline needs to be shortened, and fair process and decision-making become important much earlier. This calls for more intensive hiring, onboarding and performance management procedures. Businesses must shift their mindset from “We’ll see how they get on and address problems later” to “Let’s reduce issues earlier”. 

The new rules substantially increase organisations’ financial exposure when hiring highly paid employees, as they remove the cap on compensatory awards for unfair dismissal claims. Until 1 January 2027, compensation is limited to one year of gross salary up to £123,543. HMRC data shows that in the 2025-26 tax year, 840,000 Brits earned more than £123,543, meaning employers could face larger tribunal claims from high earners.

The probation myth

There is a common misconception that probation periods protect businesses.

Whilst probation doesn’t extend legal rights, they play an important role in talent management - enabling individuals to understand expectations and giving businesses time to assess, support and provide feedback. However, without structure, check-ins and reviews often slip, and managers avoid addressing issues, believing they have time to work them out later. Structure provides vital opportunities to provide feedback.

It is important to note that from January 2027, an employee can raise an unfair dismissal claim during their probationary period.

Getting hiring right

Traditionally, recruitment has been driven by the need to “find someone quickly” to fill a vacancy. These changes move the focus from speed of hire to quality of hire. With less time to identify issues later, the questions upfront become very important.

Getting it right first time doesn’t just reduce risk but also saves time, costs and disruption for the wider business. It should also reduce the problems passed onto HR after a hire is made and eliminate the emotional distress caused by an early exit, which affects the candidate, clients and the team.

Furthermore, the way businesses manage new hires needs to change. Historically, recruitment, onboarding and early-stage performance management have been handled separately, with recruiters, HR teams and line managers each responsible for their own part. However, the strongest outcomes happen when these elements are connected.

Practical actions to take now

Start with clarity

If businesses are clear at the recruitment stage about what success looks like, it should flow straight into the onboarding, objectives and probation. A defined role helps get the right candidate through the door. Before recruiting, businesses need to know: how do we define “good”? Assess people consistently across the business, focusing on behaviours and culture fit, not just capability. The strongest hiring processes aren’t necessarily more complicated; they are clearer and more structured, and they give everyone a stronger understanding of what they are looking for.

Onboarding plays an equally important role in helping employees understand expectations and achieve success, which can prevent management issues later.

Face difficult conversations earlier.

Give managers the confidence to have challenging conversations. Create positive feedback loop structures to help them discuss what people are doing right and wrong – this makes performance easier to manage.

Establish audit trails

Consistent practices and keeping robust records will become critical, helping to minimise business risk in unfair dismissal cases.

If you’d like to sense-check your current recruitment approach, we’re happy to offer a free 30-minute discussion around hiring, probation and onboarding. Contact james.houston@omnygroup.co.uk or 01733 830838