For years, many UK employers have treated the first two years of employment as a safety net. If a new hire did not work out, it was relatively simple to part ways.
That safety net is getting much smaller.
The Employment Rights Act 2025 is the biggest change to UK employment law in a generation. One of its most important changes for employers is simple: from 1 January 2027, employees will be protected from unfair dismissal after six months, not two years.
This article explains what is changing, what it means in practice, and why the smartest response is not more paperwork after you hire, but better decisions before you hire.
This article is a general guide, not legal advice. Speak to an employment lawyer about your own situation.
What is changing?
The Act brings in a long list of changes over 2026 and 2027. For hiring, these are the ones that matter most.
Unfair dismissal protection after six months
Today, most employees need two years of service before they can claim unfair dismissal. From 1 January 2027, that drops to six months.
There is no transition period. Anyone who has worked for you for six months on 1 January 2027 will be covered from that day. In practice, that means people you hire from July 2026 onwards will reach the new threshold as soon as the rule begins.
No cap on compensation
At the same time, the cap on compensation for unfair dismissal is being removed. Until now, awards were limited to the lower of a year's pay or a fixed amount. Without a cap, a badly handled dismissal can cost far more than before.
Other changes along the way
The Act also changes statutory sick pay, flexible working requests, zero-hours contracts and "fire and rehire" practices, among other things. Each brings its own work for HR teams. But the unfair dismissal change has the most direct impact on how you recruit.
What this means for employers
Your real "trial period" is now six months
Probation periods will still matter, but the window to make a fair, low-risk decision about a new hire is now much shorter. Six months goes quickly. For many roles, a new starter is only just fully trained by then.
If you only find out at month five that someone cannot do the job, you will have very little time to support them, set targets and review progress fairly.
Ending employment needs a fair process, sooner
After six months, letting someone go will need a fair reason and a fair process, just as it does today for employees with two years of service. That means clear records, honest feedback and a chance to improve. It takes time, effort and management attention.
A bad hire costs more
A bad hire was already expensive. There is the salary, the recruitment fees, the training time, the impact on the team and the cost of hiring again. Now add a higher legal risk if the relationship ends badly, with no upper limit on compensation.
For more on this, see our guide to the hidden costs of a bad hire.
The answer is better hiring, not more paperwork
Many employers will respond by tightening probation reviews. That is sensible. But it treats the symptom, not the cause.
The best way to avoid a difficult dismissal at month seven is not to hire the wrong person in the first place. That means getting better evidence before you make an offer.
1. Decide what the job really needs
Before you advertise, write down the skills, abilities and working style that make someone good at the role. Be specific. "Good with numbers" is vague. "Can read a sales report and spot a trend" is something you can test.
2. Test skills before you read CVs
A CV tells you what a person says they have done. It does not tell you what they can do. Using skills assessments before CV screening means every candidate is judged on the same evidence, from the start.
3. Measure more than one thing
Most hiring mistakes are not about one missing skill. They come from a mix: someone who can do the work but struggles with the pace, or who has the knowledge but not the judgement. A balanced assessment might include:
- Aptitude tests for reasoning and problem solving
- Job skills tests for the practical work of the role
- Soft skills tests for things like communication, teamwork and accountability
- Personality tests for working style and fit with the role
4. Use the results at interview
Test results are not just a filter. They are a guide for your interview. If a candidate scored lower on time management, ask about a time they juggled competing deadlines. You will learn far more than from a general "tell me about yourself".
5. Keep a clear record
When every candidate takes the same assessment, you have a consistent, objective record of why you chose who you chose. That supports fairer decisions, and it makes your process easier to explain if it is ever questioned.
6. Use probation well
Once someone is hired, their assessment results can shape their first months. If you know where a new starter is strongest and where they need support, you can plan training from day one, and spot any real problems early, while there is still time to fix them.
A quick checklist before January 2027
- Review your probation periods and make sure reviews happen well before month six.
- Train managers to give clear, recorded feedback early.
- Define the skills and traits each role needs before you advertise.
- Add objective skills and aptitude testing to the start of your process.
- Use test results to plan structured interviews and onboarding.
The bottom line
The Employment Rights Act 2025 does not stop you from letting someone go who is not right for the job. But it makes that decision come sooner, cost more and need more care.
That puts the weight of risk where it has always belonged: on the hiring decision. Employers who invest in better evidence before they hire will feel these changes the least.
Test Candidates helps you see the real skills, abilities and working style of every applicant before you make an offer. Build an assessment for any role in minutes, mixing aptitude, personality, soft skills and job skills tests. See how it works or start free.
Frequently asked questions
When does the six-month unfair dismissal rule start?
From 1 January 2027. Employees with six months' continuous service on that date will be covered straight away.
Does the Employment Rights Act stop probation periods?
No. You can still use probation periods. But after six months' service, an employee will have unfair dismissal protection, so any decision to end employment after that point will need a fair reason and a fair process.
Who does the change affect first?
Anyone hired on or before 1 July 2026 will have six months' service by 1 January 2027, so they will be protected from the day the rule starts.
How can pre-employment testing reduce the risk?
Testing gives you objective evidence of a candidate's skills and working style before you make an offer. Better evidence means fewer bad hires, and fewer difficult conversations later.
