Unfair dismissal rights: Are your probation and performance improvement plans future-ready?

The Employment Rights Act is reshaping how employers manage performance. From 1 January 2027, employees are expected to gain the right to claim unfair dismissal after six months instead of two years. This significantly reduces the time available to identify performance issues, set expectations, and take action.

The key question for HR leaders is how to improve performance management within a six-month unfair dismissal window. The risk is whether managers are equipped to make fair, timely, and consistent decisions in that timeframe.

Based on anticipated changes and analysis of internal data, probation-related activity could rise by up to 230%, requiring around 13% more ER advisory resource. Research also shows only 40% of HR leaders believe managers have the skills to manage ER issues effectively.

This creates a gap between demand and manager capability that many organisations are not yet equipped to manage. To understand why this gap is emerging, it’s important to look at how the Employment Rights Act is changing the risk landscape.

Employment Rights Act impact

The proposed shift to day-one unfair dismissal rights was revised before the Act became law, but the move to a six-month qualifying period, alongside the removal of the cap on unfair dismissal compensation, still significantly increases the risk profile for employers.

Where there is a clear performance issue, supported by consistent processes and well-documented evidence, dismissal remains a valid and defensible outcome. The risk rises when decisions are made without clear expectations, without regular performance conversations, and without evidence that the process has been fair and consistent. This shifts risk directly into day-to-day manager decision-making.

Managers now have less time to identify underperformance and fewer opportunities to recover poor processes, and decisions need to be made earlier, with greater consistency and stronger evidence. The question is whether inexperienced managers are equipped to handle this level of complexity.

Evolving the ER operating model

In practice, many organisations are not set up to support managers at this level. Research shows 77% of organisations still rely on spreadsheets to manage ER matters, including performance improvement plans, limiting visibility and increasing the risk of inconsistent, poorly evidenced decisions. Without a robust structure, performance issues are tracked manually, visibility is limited, and action is delayed.

Addressing this gap requires an evolution of the employee relations operating model.

How HR teams can respond

To reduce risk and improve outcomes, HR teams can focus on:

• Implementing values-based, inclusive recruitment from the outset
• Equipping managers to make fair, timely, and well-documented decisions
• Improving visibility of probation and performance data across the organisation
• Outsourcing ER support to help managers intervene before issues escalate
• Exploring a tech-enabled ER operating model to reduce risk and drive growth

A future-ready ER operating model combines ER case management technology with expert advisory support, giving managers guidance in the moment and giving HR teams real-time oversight.

The impact of this approach is earlier intervention, better documentation, and more consistent outcomes. Organisations leveraging this approach are already seeing measurable impact.

Real-world impact

One organisation partnered with Empowering People Group to manage performance concerns for 284 underperforming employees. With expert support, structured ER case management, and consistent performance improvement plans, 18% of cases were resolved informally and 46% were successfully addressed through structured performance improvement plans (PIPs).

Nearly two-thirds were resolved without formal escalation, showing how the right mix of outsourcing, technology, and early intervention can build manager capability while reducing the need for escalation. When applied consistently, these changes transform how HR operates at a strategic level.

From performance to strategy

When managers are enabled to self-serve ER cases, backed by expert guidance in the moment, HR teams can step back from day-to-day case management, giving them back capacity to focus on strategic priorities.

Data-driven employee relations performance metrics, including performance trends, resolution timelines, and manager interventions, makes it easier to identify capability gaps and target support where it will have the greatest impact.

That improves decision-making, reduces risk, strengthens consistency at scale, and supports organisations in maximising management and people performance.

Modernise performance management now

Manager capability gaps, HR capacity pressures, and ER operating models not designed for the complexity of the Employment Rights Act all make one thing clear. Organisations cannot afford to delay preparation.

Now is the time to strengthen how performance is managed in the first six months of employment and take a more structured approach to improving performance management at scale to reduce the risk of unfair dismissal claims.

For a deeper look at what this shift means in practice, watch our on-demand webinar: ‘From pre-hire to probation: Why the 6-month window changes everything’.

FAQs: Performance management and the Employment Rights Act

1. What does the Employment Rights Act mean for probation periods? The shift to a six-month unfair dismissal window reduces the time available to manage performance and make informed decisions. Employers need stronger processes and earlier intervention to manage risk effectively.
2. How can HR teams improve performance management in the first six months? HR teams should strengthen performance processes, equip managers with better guidance, improve visibility of employee relations data, and introduce structured performance improvement plans earlier.
3. Why is manager capability critical under the 6-month rule? Managers now have less time to identify and address performance issues. Without consistent decision-making and documentation, the risk of escalation and unfair dismissal claims increases.
4. What role do performance improvement plans (PIPs) play in reducing risk? Structured performance improvement plans help managers address issues early, set clear expectations, and create a documented pathway for improvement, reducing the likelihood of formal escalation.
5. How can organisations reduce unfair dismissal risk? By strengthening performance management in probation, improving documentation, supporting managers in real time, and using data to identify and address issues earlier.