18 Jun 2026
By Albany HR.
Advice from an HR consultant in Edinburgh on why probation periods matter more than ever with the new 6-month unfair dismissal rules arriving in 2027.
As an owner of a small business, you’ve probably always seen probation periods as a bit of a formality.
From January 2027, that assumption could cost you a lot of money.
The qualifying period for unfair dismissal claims is dropping from two years to six months, and the compensation cap is being removed entirely.
Your probation process is now the single most important tool you have to protect your business during those early months of employment.
Let me walk you through what’s changing and what you need to do about it.
Right now, an employee needs two years of continuous service before they can bring an unfair dismissal claim. That gives you a generous window to assess whether someone is the right fit for your organisation.
From 1 January 2027, that window shrinks to just six months.
On top of that, the statutory cap on unfair dismissal compensation is being removed altogether. So if you get a dismissal wrong after that six-month point, the financial exposure is far greater than it used to be.
It’s also worth remembering that certain claims, including discrimination and whistleblowing, are already day-1 rights. Those haven’t changed. But the new rules mean the broader protections kick in much sooner.
Under the old two-year qualifying period, many businesses ran probation informally. If things didn’t work out, you could part ways without too much worry about process or documentation. The long qualifying period acted as a buffer.
That buffer is disappearing.
Your probation period is now the structured time you have to properly evaluate a new hire, raise any concerns, and make a decision about their future in the role. All of that needs to happen before the six-month mark.
If you don’t have a robust probation process in place, you risk drifting past that six-month point without having addressed performance issues. At that stage, removing someone from the business requires a fair reason and a formal process, with a much higher burden of proof on you as the employer.
Having a probation clause in your employment contract is a good start, but on its own it doesn’t do very much. The clause needs a proper process sitting behind it.
Here’s what that looks like in practice:
Each of these steps creates a paper trail. That documentation is what protects you if anyone ever questions the decision you made.
Most businesses default to a six-month probation period. But with the new qualifying period also set at six months, there’s a strong argument for reducing your probation to three months instead.
A shorter probation period forces earlier action. Managers can’t keep putting off difficult conversations when there’s a clear deadline approaching. Issues get identified and dealt with sooner.
And here’s the practical benefit: if you complete probation at three months and things aren’t working, you still have time to act before unfair dismissal rights apply at six months.
You could also allow a limited extension of around one month for borderline cases. That gives you some flexibility without pushing too close to the danger zone.
The important thing is that decisions are made well before month six. Waiting until the last moment is a risk you don’t need to take.
A common pattern I see through my HR consultancy services in Edinburgh and Glasgow is that probation problems don’t actually originate with the employee. They start with a manager who avoided having a tough conversation, or who assumed the issue would resolve itself over time.
Some managers simply aren’t aware of how much the rules are changing. They’re still operating as if they have two years to make a call on someone.
If the people responsible for running reviews and deciding whether a new hire stays or goes aren’t properly trained, even the best probation policy won’t keep your business safe. Investing in manager training now, before the new rules take effect, is one of the most practical steps you can take.
Before January 2027 arrives, it’s worth taking a moment to reflect on where your business stands:
If any of those questions give you pause, now is the time to act.
We understand that all of this can feel like a lot to get your head around, especially when you’re already busy running your business.
That’s exactly why we’re here.
As an outsourced HR consultant in Edinburgh, I can review your existing probation process, tighten up your documentation, and make sure your managers feel confident handling those early months of employment.
Getting this right before the new rules come into force will save you time, money, and a great deal of stress down the line.
Get in touch and let’s have a conversation about how to make your probation process fit for purpose. I’d love to help.
