The Unfair Dismissal Rule Change: What It Means for Probation, Performance Management, and Exits

Of all the changes in the Employment Rights Act, this one tends to generate the most questions — and the most anxiety — from small business owners.

The two-year qualifying period for unfair dismissal protection is changing. You will only have 6 months of protection.  This is a huge shift.

Here's what you need to understand — and what you need to do about it.

Why the Two-Year Rule Matters (and Why Losing It Changes Everything)

The current two-year rule has, whether intentionally or not, given employers a degree of flexibility in the early stages of employment. If someone wasn't working out, and they were within two years, the risk calculation was straightforward.

That calculation is changing. The new framework will require employers to demonstrate that any dismissal — much earlier in the employment relationship — was for a fair reason and followed a fair process. The same standards that currently apply to employees with two years' service will apply much sooner.

This isn't inherently unfair on employers. But it does require a shift in how you think about and manage people from day one.

What Happens to Probation Periods?

Probation periods aren't going away. But the way you use them needs to change.

A probation period is only meaningful if it's actively used. That means:

• Setting clear expectations at the outset — in writing, and ideally discussed in person

• Conducting regular check-ins during probation, not just a single review at the end

• Documenting any concerns as they arise, with evidence of the support provided

• Having a clear, fair process for extending or ending probation if performance or conduct isn't meeting the standard

The businesses most at risk under the new rules are those where probation is a label rather than a process. A line in a contract that says 'six-month probation period' isn't going to protect you if you've had no documented conversations, no formal reviews, and no evidence that the employee understood what was expected of them.

Performance Management from Day One

The ERA changes make early, structured performance management not just good practice — but genuinely risk-reducing.

This doesn't mean treating new starters with suspicion or creating unnecessary bureaucracy. It means having a clear onboarding process, setting measurable objectives, and creating a paper trail that demonstrates you gave someone a fair opportunity and responded appropriately when things weren't working.

For many small businesses, this is the bit that falls down — not out of negligence, but because people management gets deprioritised when you're also running the business. The ERA is a good reason to fix that.

What About Difficult Exits?

Exits are where the practical implications of this change are felt most acutely. Under the new regime, if you want to part ways with someone in the early months of employment, you'll need:

• A documented fair reason for dismissal

• Evidence that a fair process was followed

• A record of any warnings, support offered, or opportunities to improve

• In most cases, a proper dismissal meeting with the right to be accompanied

None of this is impossible. But it does require having the systems and habits in place before you need them — not scrambling to reconstruct a paper trail after the fact.

The Practical Takeaway

If you take one thing from this article, let it be this: the way you manage the first six months of someone's employment matters more than it ever has.

Get the onboarding right. Have the conversations early. Document as you go. And if something isn't working, deal with it promptly and properly — rather than hoping it resolves itself or waiting until it becomes a bigger problem.

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Need help with this?

If you'd like support getting your HR foundations right — contracts, policies, processes, or anything people-related — The People Consultancy is here to help.

We work with growing businesses across West Sussex and beyond, providing practical, straightforward HR support that fits your size and budget.

Get in touch: hello@thepeopleconsultancy.uk | 01243 256610