Understanding the Employment Rights Act 2025: How the Six-Month Rule Changes HR Practices

The Employment Rights Act 2025 received Royal Assent on 18 December 2025 and introduces 28 individual reforms to UK employment law. The change with the greatest operational impact for most employers is the reduction of the unfair dismissal qualifying period from two years to six months, effective 1 January 2027. That single shift turns probation from an informal grace period into a structured legal milestone — and it demands changes to contracts, policies, management training, and documentation practices across every organisation that hires staff.

ProbationWatch tracks the 182-day qualifying period from each employee's actual start date and prompts managers through a four-stage review sequence — so your process is compliant before the deadline hits. See how it works →

What Does the Employment Rights Act 2025 Mean for Employers?

The Act is the legislative vehicle for the government's "Make Work Pay" agenda, described in parliamentary briefings as the biggest upgrade to workers' rights in a generation. It does not arrive all at once — its provisions roll out across two key dates, with further secondary legislation expected over subsequent years.

For employers, the practical meaning is this: the legal framework governing how you hire, manage, and dismiss employees is changing substantially, and the changes that matter most take effect within the next ten months.

The Act covers areas including unfair dismissal, statutory sick pay, fire and rehire practices, zero-hours contracts, trade union access, third-party harassment, and the establishment of a new enforcement body. But for any employer running a probation process, the qualifying period reduction is the provision that will most directly affect day-to-day HR operations.

What Are the Main Changes in the Employment Rights Act 2025?

The reforms land in two waves. Understanding which changes apply when is essential for planning.

April 2026 changes — already in effect

Statutory Sick Pay becomes a Day-1 right (6 April 2026). The three waiting days before SSP becomes payable have been removed. The Lower Earnings Limit — which previously excluded lower-paid employees from SSP eligibility — has also been abolished. For lower earners, SSP is now set at 80% of average weekly earnings, capped at the standard SSP rate. Every probationary employee is now entitled to SSP from their first day of sickness absence.

The Fair Work Agency launches (7 April 2026). The FWA is established as an Executive Agency of the Department for Business and Trade, consolidating enforcement of holiday pay, SSP, national minimum wage, and agency worker regulations into a single body. It has the power to proactively investigate employers based on sector, location, and size — not only in response to worker complaints. It can request employment contracts, payslips, meeting notes, termination letters, and company policies.

Protective awards for failure to consult on collective redundancies are doubled. The maximum protective award rises from 90 days' to 180 days' pay.

January 2027 changes — coming next

The unfair dismissal qualifying period drops from two years to six months (1 January 2027). Employees will gain the right to claim ordinary unfair dismissal once they have completed six months of continuous service. This is the change that transforms probation management from a discretionary HR practice into a compliance-critical process.

The compensation cap for unfair dismissal is removed (1 January 2027). Currently, compensation for unfair dismissal is capped at the lower of £118,223 or 52 weeks' gross pay. From January 2027, that cap is abolished. Tribunal awards will be based solely on the employee's actual financial loss, with no statutory ceiling. For senior or highly paid employees, this significantly increases the financial exposure from a poorly handled dismissal.

A "lighter-touch" initial period of employment is expected. The government has indicated that a statutory initial period of employment will apply during the first six months, during which a simpler process for dismissal may be permitted — but the details remain subject to secondary legislation and consultation. Employers should not rely on this as a reason to delay preparing their processes. Even under a lighter-touch framework, legal commentary from firms including Bird & Bird and DLA Piper is clear: documented reasoning and a fair process will still be expected.

How Does the Six-Month Rule Affect Probation Periods?

Under the current two-year qualifying period, probation is largely a contractual arrangement with limited legal consequence. An employer can dismiss a new hire within the first two years for virtually any reason (other than automatically unfair reasons such as discrimination) without the employee being able to claim ordinary unfair dismissal. That has allowed many employers to operate probation informally — relying on verbal conversations, ad-hoc feedback, and end-of-period gut decisions.

From 1 January 2027, that margin disappears. Once an employee reaches six months of continuous service, they can bring an unfair dismissal claim. The employer must then demonstrate both a fair reason for dismissal and a fair procedure.

Three practical consequences follow:

Probation decisions must happen before Day 182. Employment law specialists, including Bird & Bird, advise that employers should complete their assessment of a new starter's suitability before the six-month point. Some firms recommend setting probation periods at five months rather than six, to build in a buffer for extensions or delayed decisions.

Extending probation does not extend the protection deadline. This is a widespread misconception. The statutory qualifying period is based on continuous service, not on the contractual probation period. If an employer extends probation to eight months, the employee still gains unfair dismissal rights at six months. The extension does not buy additional time to dismiss without risk.

Every probation decision needs a documented trail. The tribunal test for unfair dismissal requires the employer to show what happened, when, and why. Without contemporaneous records of objectives, feedback, support, and decision-making, the employer is fighting that test with no evidence.

ProbationWatch counts from the employee's actual start date — not from when HR remembers to set a reminder — and triggers escalating alerts at Day 150, 165, 175, and 182. See the full feature set →

What HR Policies Need Updating for 2026 and 2027?

The Act does not require employers to have a probation policy — probation has no special status in UK employment law and remains a contractual matter. But the practical reality is that any employer without an updated, structured probation process will be exposed to significantly greater legal and financial risk from January 2027.

Contracts of employment

Review employment contracts to ensure they include a clearly defined probation period with an explicit end date (or a formula linked to the start date), the right to extend probation where justified, notice provisions during and after probation, and a reference to the organisation's probation policy and review process.

Probation policy

If you do not have a standalone probation policy, create one. If you do, review it against the following: does it set out a structured review schedule? Does it define what objectives are set and when? Does it explain the process for raising concerns, providing support, and reaching a decision? Does it confirm that the final decision must be made and communicated before the six-month point? Does it align with the ACAS Code of Practice?

Manager training

Fewer than half of UK organisations provide line manager training on managing probation, according to Brightmine's 2025 research. Managers are the people conducting reviews, giving feedback, and making recommendations — if they are not trained on what to document and when, the organisation's policies exist only on paper.

SSP and absence processes

With SSP now payable from Day 1, absence policies that reference waiting days or the Lower Earnings Limit need updating. Any process that treats probationary employees differently for sick pay purposes must be reviewed for compliance.

Record-keeping systems

The Fair Work Agency can request records proactively. Employers still relying on spreadsheets, email chains, and local files to manage probation documentation should consider whether those systems can produce a credible, complete record under audit conditions. Research consistently shows that 88% of spreadsheets contain errors, and compliance experts note that spreadsheets have weak controls, poor audit trails, and little protection against mistakes.

What Is the Difference Between the Old and New Unfair Dismissal Qualifying Period?

The change is straightforward in principle but significant in practice.

Before 1 January 2027: An employee needs two years of continuous service to claim ordinary unfair dismissal. Employers have a substantial window to assess new hires and make decisions without the full weight of unfair dismissal law applying.

From 1 January 2027: The qualifying period drops to six months. An employee dismissed after six months of continuous service can claim unfair dismissal. The employer must demonstrate a fair reason (capability, conduct, redundancy, illegality, or some other substantial reason) and a fair procedure.

What stays the same: Automatically unfair dismissal claims — those based on discrimination, whistleblowing, asserting a statutory right, pregnancy, trade union membership, and similar protected grounds — have never required a qualifying period and continue to apply from Day 1.

The financial exposure changes dramatically. Under the current regime, the compensation cap limits most unfair dismissal awards. From January 2027, the cap is removed. Tribunal awards will reflect the employee's actual financial loss — salary, benefits, pension, future earnings — with no statutory ceiling. The government's own impact assessment estimated that the reforms will lead to approximately 9,000 additional ACAS early conciliation referrals per year, of which around 3,000 are expected to progress to tribunal claims. Employment tribunal single claim receipts were already up 20% year-on-year in Q2 2025/26 before the new rules take effect.

When Does the Employment Rights Act 2025 Come into Effect?

The Act received Royal Assent on 18 December 2025, but its provisions are being implemented in stages. The two dates that matter most for employers managing probation:

6–7 April 2026 (already in effect): Day-1 SSP rights, Fair Work Agency launch, doubled protective awards for collective redundancy consultation failures.

1 January 2027: Six-month unfair dismissal qualifying period, removal of the compensation cap.

Further provisions — including details on the statutory initial period of employment, zero-hours contract reforms, and trade union access — are expected to be brought into force through secondary legislation over the course of 2027 and beyond. The government has confirmed it intends to consult on several areas before finalising detailed regulations.

The critical point for employers: the January 2027 deadline is fixed in primary legislation. It does not depend on secondary legislation or further consultation. Employers should be preparing now.

ProbationWatch is built for the post-ERA 2025 world — structured reviews, ACAS-aligned records, sealed evidence chains, and countdown alerts that ensure no employee crosses Day 182 without a documented decision. Start your free trial →

What Should UK Employers Do Now?

The gap between awareness and action is where risk lives. Most employers have heard about the Employment Rights Act 2025; far fewer have changed anything in response. Brightmine's 2025 research found that only one in five employers had reviewed or updated their probation policies in anticipation of the changes.

A practical preparation sequence:

Before April 2026 (if not already done): Update SSP and absence policies to reflect Day-1 entitlement. Brief managers on the Fair Work Agency's powers and what records may be requested. Audit your current record-keeping to identify gaps.

By September 2026: Review and update employment contracts to include robust probation clauses. Draft or revise your probation policy to include a structured review schedule with milestones before Day 182. Train managers on conducting and documenting reviews.

By December 2026: Ensure a system is in place to track every employee's start date, calculate Day 182, and trigger review prompts at defined intervals. Test the process with current probationary employees. Confirm that records are stored securely and can be produced on request.

From 1 January 2027: Operate the new process for every hire. Every probationary employee should have documented objectives, structured reviews, and a recorded decision before they reach six months of service.

Frequently Asked Questions

What does the Employment Rights Act 2025 mean for employers?

The Act introduces 28 reforms to UK employment law, implemented in stages from April 2026. The most significant change for day-to-day HR operations is the reduction of the unfair dismissal qualifying period from two years to six months, effective 1 January 2027. Employers must update contracts, probation policies, manager training, and documentation practices to meet the new standard.

When does the Employment Rights Act 2025 come into effect?

The Act received Royal Assent on 18 December 2025. Key provisions take effect on two dates: 6–7 April 2026 (Day-1 SSP, Fair Work Agency launch) and 1 January 2027 (six-month qualifying period for unfair dismissal, removal of the compensation cap). Further provisions will follow through secondary legislation.

How does the six-month rule affect probation periods?

From January 2027, employees gain unfair dismissal rights after six months of continuous service. Employers must complete their assessment of new starters and make a documented decision before that point. Extending the contractual probation period beyond six months does not delay the employee's statutory rights.

What HR policies need updating for 2026 and 2027?

Employment contracts should include clear probation clauses. Probation policies should set out structured review schedules with defined milestones. SSP and absence policies need updating for Day-1 entitlement. Manager training should cover documentation requirements. Record-keeping systems should be reviewed for audit readiness.

What are the main changes in the Employment Rights Act 2025?

The Act covers unfair dismissal qualifying period reduction, removal of the compensation cap, Day-1 statutory sick pay, establishment of the Fair Work Agency, reforms to zero-hours contracts, restrictions on fire and rehire, trade union access rights, third-party harassment provisions, and doubled protective awards for collective redundancy consultation failures.

What is the difference between the old and new unfair dismissal qualifying period?

Currently, employees need two years of continuous service to claim ordinary unfair dismissal. From 1 January 2027, that drops to six months. The compensation cap is also removed — tribunal awards will reflect actual financial loss with no statutory ceiling. Automatically unfair dismissal claims (discrimination, whistleblowing, etc.) continue to apply from Day 1 regardless.