There is a quiet piece of arithmetic in the Employment Rights Act 2025 that most businesses have not done.
The reduction in the unfair dismissal qualifying period takes effect in January 2027. It applies to employees already in employment at that date, not only to those hired afterwards. Work backwards from the current two-year period and anyone recruited from around the end of June 2026 will acquire the protection in January.
Which means the hiring you are doing this month is already inside the window.
Why does this matter more than it sounds?
Not because dismissing people becomes impossible. It does not. It becomes procedural.
Today, a business that recruits badly can part company in the first two years with limited exposure to an unfair dismissal claim. That safety valve has done a lot of quiet work in owner-managed businesses, which typically recruit without a formal HR function and correct mistakes as they emerge.
From January 2027, the correction has to be justified and documented. The substance of the decision may be identical; the difference is whether you can evidence it.
What actually needs to change?
Recruitment. The cost of a poor hire rises, which shifts the balance towards spending more at the front end. Structured interviews, meaningful references, and a realistic job preview cost less than a defensible dismissal process.
Probation. Most probation clauses in owner-managed businesses are decorative — a period named in the contract with no process behind it. From January 2027 the probation period is your primary tool, and it needs to function: defined objectives, scheduled reviews, written feedback, a clear decision point before it expires, and a documented extension mechanism.
Documentation. Managers need to be recording performance conversations at the time, not reconstructing them afterwards. This is the single change most likely to be resisted and most valuable in practice.
Contracts. Review probation clauses, notice provisions during probation, and any language assuming a two-year qualifying period.
What about the rest of the timetable?
The Act phases through 2027 with common commencement dates in April and October. The Fair Work Agency, launched on 7 April 2026, consolidates enforcement of the national minimum wage and agency worker rules, with holiday pay enforcement expected to follow.
For a business with a payroll of any size, the practical effect is that employment compliance is becoming a scheduled programme rather than an occasional event.
What would we advise a client to do this quarter?
Three things, in order.
Identify who is in the window. Anyone hired from late June 2026 who will still be employed in January 2027 acquires the protection. If you have people in that group about whom you already have doubts, address it now, properly and fairly, rather than in December.
Make probation real. If your standard contract has a six-month probation period that nobody manages, it will not help you. A functioning probation process is the difference between a defensible decision and an expensive one.
Train the managers who make hiring and performance decisions. The legal position will be well handled by advisers. The evidence trail is created — or not — by line managers in ordinary conversations, months before anyone thinks a dispute is possible.
Frequently asked questions
When does the unfair dismissal qualifying period change?
January 2027, under the Employment Rights Act 2025. It applies to employees already in employment at that date, so employees recruited from around the end of June 2026 will acquire protection at commencement rather than having to wait.
Does this mean we cannot dismiss new employees?
No. It means a dismissal must be for a fair reason and follow a fair process. Capability and conduct remain fair reasons. What changes is that the decision must be justifiable and evidenced rather than simply made.
Will probation periods still work?
Yes, provided they function in practice. A named period with no objectives, reviews or decision point offers little protection. A managed probation with documented feedback and a clear decision before expiry remains the most effective tool.
What is the Fair Work Agency?
A single enforcement body launched on 7 April 2026, consolidating enforcement functions including the national minimum wage and agency worker rules, with holiday pay enforcement expected to be added. It replaces a fragmented enforcement landscape with one authority.
What should we prioritise before January 2027?
Identify employees hired from mid-2026 onwards, make sure your probation process actually operates rather than merely existing in the contract, and train line managers to document performance conversations contemporaneously. The legal drafting is the easy part; the evidence trail is created day to day.