Probation Period UK: What SMEs Need to Know for 2027

Probation periods have always been a useful way for employers to assess whether a new employee is right for the role.

But from 1 January 2027, they are going to matter considerably more.

The Employment Rights Act 2025 will reduce the qualifying period for ordinary unfair dismissal claims from two years to six months. That means the traditional approach of giving a new employee six months’ probation and only really making a decision towards the end is going to need a rethink.

For SMEs, the message is fairly simple:

Don’t wait until six months to decide whether someone is working out.

What is changing?

Under the current rules, an employee generally needs two years’ continuous service to bring an ordinary unfair dismissal claim.

From 1 January 2027, that qualifying period will reduce to six months.

That does not mean unfair dismissal protection becomes a day-one right. There will also continue to be certain claims where an employee is protected from day one, including discrimination and automatically unfair dismissal.

The practical difference for employers is that the first six months of employment will become much more significant.

The current position vs 1 January 2027

The important point is that probation itself isn’t changing.

What is changing is the employment law environment around it.

And here’s why 1 July 2026 matters

This is where things get particularly interesting for employers.

The change isn’t only relevant to people hired from 1 January 2027.

Take someone who starts work on 1 July 2026.

If they have a six-month probationary period, they reach six months’ service on 1 January 2027.

They will therefore be reaching the new qualifying period at exactly the point the new rules come into force.

Likewise, someone who starts in August, September, October or November 2026 will reach six months’ service during 2027.

So if you’ve been thinking:

“We’ll sort our probation process out when the new rules come in.”

You may already have employees who will be affected.

This is why employers should review their probation arrangements now rather than waiting until January 2027.

Does this mean every business should have a six-month probation?

No.

And this is probably one of the biggest misconceptions around the changes.

There is no legal requirement to have a six-month probation period.

There isn’t even a legal requirement to have a probation period at all.

Probation is a contractual arrangement between employer and employee, and the length should be appropriate to the role.

For many SMEs, I’d argue that three months is a perfectly sensible starting point.

Why?

Because three months is long enough to identify many of the obvious issues with a new starter:

• Are they capable of doing the job?

• Are they meeting expectations?

• Are they reliable?

• Are they getting on with colleagues?

• Are they demonstrating the right attitude?

• Are they responding to feedback?

• Are they actually suited to the role?

You shouldn’t need six months to discover that someone consistently isn’t turning up on time or can’t perform the fundamental requirements of their job.

But three months doesn’t mean “three months and we’re done”

This is where good probation management matters.

A three-month probation should not mean:

Month 1: Nothing

Month 2: Nothing

Month 3: “We’ve decided you’re not passing.”

If there are concerns, the employee should know about them.

A much better approach is to have regular conversations throughout probation, with a more structured review around the halfway point and a final review at three months.

That gives the employee an opportunity to understand what is expected and improve, while giving the employer a much clearer evidence base for making a decision.

And importantly, it means you’re not relying on the probation meeting itself to uncover problems.

What happens if someone isn’t working out?

This is where employers need to be careful.

It is tempting to think that because someone is “only on probation”, you can simply terminate their employment without much thought.

That’s not really what probation means.

Employees on probation still have employment rights, including protection against discrimination, automatically unfair dismissal and breach of contract.

And as the unfair dismissal qualifying period comes down to six months, employers should be increasingly comfortable with making decisions based on evidence and having a proportionate process.

That doesn’t mean every probation failure needs a lengthy formal process.

But it does mean being able to explain:

“This is what we expected, this is what happened, we raised the concerns, we gave you an opportunity to improve, and this is why we’ve decided the role isn’t working out.”

That’s a much stronger position than:

“They failed probation.”

The bigger change for SMEs

For me, the biggest impact of the six-month qualifying period isn’t actually the number itself.

It’s the fact that employers will need to become better at managing new starters from day one.

The old mindset could sometimes be:

“Let’s see how they get on.”

The new mindset should be:

“Let’s make sure they know what good looks like, give them feedback and make a properly informed decision.”

That is better for employers and employees.

It should also mean fewer situations where an employer gets to month five and suddenly realises that nobody has actually discussed the employee’s performance with them.

So what should SMEs do now?

If you’re a small business, I wouldn’t recommend completely reinventing your HR processes overnight.

I’d start with four things.

Review your probation periods

Do you currently use three, six or twelve months?

Is that actually appropriate for the roles you’re hiring?

Look at anyone currently in probation

Especially anyone who started from 1 July 2026 onwards.

Work out when they reach six months’ service and whether your current review arrangements give you enough opportunity to assess them properly.

Give managers some structure

Managers don’t need a 20-page procedure.

They do need to know:

• What they should be assessing

• When they should have review conversations

• How to raise concerns

• How to give constructive feedback

• When to involve HR or senior management

Stop treating probation as a tick-box exercise

The most useful probation process is one where the employee and manager both know how things are going.

If someone is doing brilliantly, tell them.

If they’re struggling, tell them.

If the role isn’t working, deal with it.

Don’t wait for the final day of probation.

The FoundrKit view

The reduction in the unfair dismissal qualifying period is going to make good probation management much more important for SMEs.

But I don’t think the answer is to make every employee’s probation six months simply because the law is changing.

For many businesses, I’d favour a three-month probation with meaningful reviews, while recognising that more complex roles may need longer.

The real change is cultural.

Employers need to move away from seeing probation as a period where someone simply “proves themselves” and towards seeing it as a structured period of expectations, feedback and assessment.

If you haven’t reviewed your probation process yet, now is a good time to do it.

Especially if you’ve hired anyone since July 2026.

Need to review your probation process?

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