The Labour government has now confirmed that it plans to abandon unfair dismissal as a day one right. Instead, the Employment Rights Bill is set to reduce the qualifying period from two years to six months. This is the political compromise struck with business groups and unions to get the Bill through Parliament after weeks of deadlock.
The game of Parliamentary “ping pong” is still in motion, but the U-turn has removed the main sticking point. The government’s own updates say the package is intended to keep the wider reforms on track, including day one rights to sick pay and paternity leave from April 2026, and the creation of a Fair Work Agency to police the new regime.
So what does this actually mean in practice for employers, and what should you be doing now?
Right now, employees usually need two years’ service before they can claim ordinary unfair dismissal. There is no statutory concept of a probation period, and most employers use the first two years as a risk buffer, subject to the usual day one risks such as discrimination and whistleblowing.
Under the compromise now on the table, the rules are intended to change as follows:
The exact commencement date for the new six-month right is not final, but the government’s published roadmap and recent commentary point to phased implementation between April 2026 and 2027. Employers should assume this is coming and start planning on that basis.
An 18-month reduction in the qualifying period is not a technical tweak. It fundamentally changes the shape of risk.
In simple terms:
The driving force behind this is Labour’s approach to tax and spend. Employers are already dealing with increased liability due to rising employer National Insurance contributions and frozen thresholds. The latest Autumn Budget extends the freeze on income tax and NIC thresholds, and will cap NI relief on salary sacrifice pension contributions at £2,000 per year from 2029. Over time, more people will fall into higher tax brackets without necessarily earning very much more in real terms.
Throwing “golden hellos” at candidates is unlikely to be enough to secure long-term loyalty, particularly when we are in a tax environment that deliberately leans on higher earners and on NICs. The only sensible response is to tighten the front end of the employee lifecycle: recruitment, vetting, onboarding and probation.
Under a six-month qualifying period, informal hiring will hurt more, and faster. Employers will need to move away from the mentality of “the recruiter likes them and the interview felt good”, towards a more structured, evidence-based recruitment process. In practice, that can take shape in a multitude of ways but, in my view, it looks something like this.
Better designed selection processes
Employers will build in tools that show them how a candidate actually performs. For example:
These give you far more insight than an unstructured chat, particularly where interviews are commonly held via videoconferencing platforms. And, with the proliferation of AI tools, hiring managers are often seeing the “polished” version of a candidate rather than the real person, and making hiring decisions based on that first impression.
Taking back control from recruiters
Use of recruitment agencies will not go away, but what cannot happen is employers outsourcing their judgment to them. Bluntly, recruiters are working for their commission. Most importantly, they are not the ones who will carry the risk; you will.
It is perfectly acceptable to have recruiters produce a pool of candidates, but employers must:
If the warning signs are there, they should not be ignored.
Documenting why you chose who you chose
Bringing discrimination claims is not just preserved for employees; it can also be done by candidates. In a world where corporate Britain is becoming ever more litigious, accurate and detailed records are worth their weight in gold.
Keeping factual notes on why you selected candidate A over candidate B can help place you in a defensible position if a dispute were to arise later. They can help you show an Employment Tribunal judge that decisions were based on objective criteria, rather than anything discriminatory.
Probation: your frontline risk tool
With a six-month unfair dismissal threshold, probation clauses will become your frontline risk management tool. A robust probation regime should now be treated as non-negotiable.
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Proposed Probation Review Structure |
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Initial Period of Employment |
Employer Expectations
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Month One |
Allow time for settling in, identify training needs, and note any performance and/or conduct concerns.
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Months Two to Five |
Conduct regular check-ins, focusing on constructive written feedback and setting objectives to be achieved by the next review period.
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Month Six |
Reach a conscious decision, following a fair process, about whether you will confirm, extend, or fail the probation period.
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If concerns arise, they should be recorded in writing early, not “saved up” for the end. Employers will need to take decisive action because, if someone is clearly not right for the role, then hoping things will improve is not a viable strategy (it never was). Under a six-month threshold, drifting into month seven through indecision is an avoidable own goal.
That said, this potential structure does not advocate for, or endorse, the abandonment of a fair process. Employers should still meet with the employee, explain concerns, listen to their side and confirm decisions in writing.
However, managers must be willing to say “this is not working” within the probation period. In some businesses, owners may also reserve the ultimate say as to whether a person will remain in employment or not.
You do not need to tear up your contracts tomorrow morning, but you do need a plan. A sensible checklist would include:
Moving from two years to six months is not as dramatic as day one unfair dismissal rights would have been, but it is still a major shift. The message for employers is simple:
Those who tighten recruitment, manage probation actively and document fair, evidence-based decisions will be able to navigate the new regime with confidence. Those who hope it will all work out are likely to be the ones funding the first wave of test cases.