I wonder how the new unfair dismissal rights will impact probationary periods?

The UK is currently undergoing significant changes in employment law that could impact the way employers handle probationary periods and dismissal processes. Under current law, employees must complete a minimum of two years of continuous employment before gaining the right to claim unfair dismissal. However, the Labour Government plan to remove this qualifying period, making unfair dismissal claims a day one right, causing employers to reconsider their approach to hiring and onboarding processes and how they manage probationary periods.

Current Processes for Probationary Periods and Unfair Dismissal

Probationary periods are commonly used by employers to evaluate whether a new employee is a good fit for the role and the organisation. During this time, both the employee and employer can assess performance, cultural fit, and overall suitability without a long-term commitment. Typically lasting from three to six months, probationary periods also give employers some flexibility in dismissal, as employees who leave within this period generally do not have the right to claim unfair dismissal.

Employees must have at least two years of continuous service to bring a claim for unfair dismissal, which provides employers with an extended period to assess employee suitability without substantial risk. This can encourage businesses to take on new hires without immediate concerns about unfair dismissal claims, enabling a level of flexibility in managing their workforce.

Potential Impact

If the qualifying period for unfair dismissal rights is reduced, employers may need to rethink the structure and use of probationary periods. Here are some ways the changes could affect businesses:

• Shortened Timeframe to Assess Suitability: Employers would have a shorter window to assess a new employee’s performance and fit before facing potential risks in terminating their employment. To mitigate this, businesses may need to implement more rigorous assessment protocols or conduct performance reviews more frequently.
• Greater Emphasis on Pre-Employment Checks: With less time available to evaluate suitability on the job, pre-employment checks (e.g., references, background checks, skills assessments) may become more critical. Employers might seek to gather as much information as possible about potential hires to mitigate risks associated with bringing on someone who may not be a long-term fit.
• Changes to Contract Terms: Employment contracts and the terms of probationary periods might need re-evaluation to align with the shorter unfair dismissal qualifying period. Employers may wish to explore fixed-term contracts, especially for roles with high turnover or where longer evaluations are essential. This could provide an alternative way to assess employees without the risk of unfair dismissal claims, although care should be taken as fixed-term contracts also carry certain legal implications.
• More Frequent Use of Probationary Period Reviews: If the qualifying period is reduced, employers may want to set up structured, regular reviews throughout the probation period to document performance and address any concerns promptly. This documentation could be vital if an employer ultimately decides to dismiss an employee, as it demonstrates a fair and transparent process that could help defend against potential claims.
• Potential Increase in Training and Development: A shortened probationary period may mean employers invest more in early training to help employees reach their performance goals sooner. Providing support and development opportunities early on could prevent performance issues and reduce the risk of dismissal.

How to Prepare

Given the potential adjustments to unfair dismissal, employers can take proactive steps now to adapt their hiring and probationary practices. Here are some recommendations:

• Review Onboarding and Performance Management Processes: Ensuring that all new hires go through a robust onboarding process with clearly defined goals can help improve early performance and reduce the need for dismissal. Likewise, a structured performance management system can ensure that any issues are addressed swiftly and constructively.
• Document Performance and Probationary Reviews: Comprehensive documentation of employee performance, especially during probation, is crucial. This can include progress reports, feedback sessions, and action plans to support employees in meeting role expectations.
• Reviewing Policies: Employment law is a dynamic area, and changes to unfair dismissal rights could come into effect quickly. Staying updated on legal developments and adjusting policies accordingly will help ensure compliance and mitigate risks.
• Consider Alternatives to Probationary Periods: Some employers may decide to explore alternative approaches, such as using more detailed job trials or temporary contracts as initial hiring mechanisms. These options may provide greater flexibility and reduce the risk of an unfair dismissal claim.

Conclusion

While the proposed changes to the unfair dismissal qualifying period are still under discussion, employers should consider their potential implications on probationary periods and dismissal practices. A shorter period for gaining unfair dismissal rights could increase the importance of thorough hiring practices, structured performance management, and clear documentation. Preparing for these potential changes now can help businesses navigate the evolving legal landscape, protect against risks, and create a more effective hiring and retention strategy. For employers, understanding and adapting to these shifts will be essential to minimise legal exposure and support a productive, stable workforce.

Although there is currently little guidance in place as to these changes, our Peace of Mind Team will ensure to keep all our clients up to date and our Document Audit Team can help draft or amend relevant policies. Contact our employment law team by emailing employment@warnergoodman.co.uk or by calling 023 8071 7717.