Get your recruitment right to avoid a messy break-up
Employers will need to make decisions about new hires quickly, says Blair Duncan
Valentine’s Day has been and gone. It’s a time when relationships can flourish like gifted flowers, or fizzle out like ‘meal deal’ prosecco. New employment relationships can be the same: some work out as planned, while others do not.
Previously, the latter type were not too much of a headache as, in most cases, employers had around two years to work it out before sending the break-up message. But, thanks to the Employment Rights Act 2025 (ERA), the Labour Government’s flagship employment law reforms, employers are going to have to make decisions about the future of employment relationships much more quickly.
The qualifying period to bring a claim of ordinary unfair dismissal will reduce from two years to those with six months’ continuous service. There will be some exceptions to that qualifying period, as is currently the case. The roadmap, which could change, says this right will apply from 1 January 2027. So, as things stand, anyone who has six months’ continuous employment as at 1 January 2027 will have the right to claim unfair dismissal (the provisions aren’t limited to those starting on or after 1 January 2027).
This should not, however, be seen as a reason to panic as many employers have robust procedures for assessing employees in any probationary period. For those who do not, now is the time to dust them off and consider how to manage new starts, although both parties might still be getting to know each other and not have identified any cracks in the relationship.
In addition to that change, the cap on unfair dismissal awards (at the time of writing the lower of one year’s gross pay or £118,223) will be removed. On this surface, this change won’t affect many beyond the highest earners – but it could make negotiation of, mainly senior, employee exits more difficult on the basis that it is harder to quantify an award which the employee could seek at tribunal. Arguably, settlement agreements could become more common, given that more employees are likely to be caught by unfair dismissal protection, so the removal of the cap could also become a very important consideration for employers.
The ERA will also bring changes, recently pushed back to January 2027, to an employer’s ability to dismiss and re-engage employees who refuse to agree changes to employment terms. To many reading this, that may seem fair enough but there are often legitimate reasons why an employer might need to make those changes, including business restructure or financial difficulty. Dismissal and re-engagement can be useful to an employer in such cases as a last resort but will become much more difficult from next year.
Going forward, in all but the most extreme of cases, it could become automatically unfair for an employer to dismiss in those circumstances, save for cases where the employer is in financial distress, although what that means in practice is not yet clear – but it would suggest a high bar.
The decision-making process during recruitment is arguably about to become much more important for the employer than ever. The honeymoon period will be much shorter and the penalty for making a wrong decision could also increase. Better recruitment exercises, proactive management during probationary periods and swift action if red flags emerge will be crucial to avoid messy break-ups.
Blair Duncan is an Associate Solicitor, Blackadders