Employers guide to probation periods: What changes will the Employment Rights Bill bring for the future?

It’s reasonable to assume that most people know what a probationary period is. In short, it’s a trial period at the start of a new employee’s appointment within a business, usually lasting three to six months, during which the employer can assess whether the employee is a suitable fit.

However, with the Employment Rights Bill nearing Royal Assent and the laws around unfair dismissal set to change so that it becomes a right after six months’ service from 2027, probationary periods will become even more important for employers. Now is the time to ensure that (a) you have them in your contracts, and (b) your managers know how to use them properly.

In this article, we’ll guide you through probationary periods, helping you understand their limitations and benefits so that you can use them effectively to get the most out of the employment and integration of a new employee.

1. Are probationary periods mandatory?

Probationary periods are not mandatory, but they are an excellent way to establish the right working relationship from the start and to ensure a successful future within the business. They help to set expectations and clarify what is required in the role. When used effectively, they allow for regular monitoring and review. If an appointment is unlikely to work out, it’s better to identify this early and take appropriate action while you still can.

A probationary period also allows you to apply shorter notice periods and withhold certain contractual benefits, such as company sick pay and bonuses. Think of it as a valuable opportunity to start well and minimise risk later.

Well-managed probationary periods also help create a clear record of communication and decisions, and a documented paper trail can be invaluable if a complaint or dispute arises.

2. Getting the most from a probation period

A probation period is not just a formality, it’s an opportunity to set employees up for long-term success. Using it effectively helps ensure that new hires integrate smoothly into the organisation, understand their role, and perform to their full potential. Clear expectations, measurable goals, and regular feedback allow managers to identify strengths and address challenges early, reducing the risk of future performance or engagement issues.

It’s equally important to work closely with the employee to ensure they understand what is expected of them and that the role aligns with what they were originally hired for. Early conversations about responsibilities, priorities, and objectives can prevent misunderstandings, increase engagement, and improve retention. Probation periods are most effective when approached as a two-way process: employees have the opportunity to demonstrate their skills, and employers have the chance to confirm the fit for the role and organisation.

3. Ending a probation period

Concluding a probation period should be handled carefully and systematically. Formal review meetings should assess whether the employee has met expectations and provide clear guidance on next steps. If performance has been strong, this may be an opportunity to confirm permanent employment or discuss additional responsibilities. If performance is below expectations, managers should consider whether extending the probation or implementing targeted support would help the employee improve.

Decisions made during probation should be formally recognised and documented, both to provide transparency and to protect the business from future legal risks. While some elements may overlap with standard appraisal processes, probation reviews are distinct and should focus on the specific objectives and expectations set at the start of the period. Properly documented and structured reviews ensure fairness, clarity, and accountability for both the employee and the employer.

4. Is it easier to terminate someone who is on probation?

Yes – but with caution. Currently, employees need two years’ continuous service to gain unfair dismissal rights. This doesn’t prevent dismissal after the two years, but employees can challenge both the reason and the procedure at an Employment Tribunal. A successful claim can result in compensation, and even unsuccessful claims can lead to significant legal fees and reputational risk for employers.

There are exceptions to the two-year rule, primarily where a dismissal could be automatically unfair, such as in cases of alleged discrimination or whistleblowing. In these situations, the risk is substantial even during probation, so we always recommend a thorough risk assessment and following the correct process. Identifying risk can sometimes be difficult, particularly when statutory rights are asserted.

With the Employment Rights Bill expected to come into effect via phased implementation, changes to unfair dismissal rules are anticipated in autumn 2027. This will increase the risks for employers whose employees do not yet have two years’ service. Employees will have protection from day one, though some dismissals may follow a “light touch” procedure and compensation rules could differ. While full details are not yet confirmed, this is expected to apply mainly to capability or conduct dismissals. Redundancies will likely remain subject to the usual fairness tests from day one.

5. How to properly implement probation periods

A well-implemented probation period provides structure and security within the employment process while giving employees a clear framework to demonstrate their capability and integrate successfully into the organisation.

Key steps to implementing probation periods effectively include:

• Review and update contracts: Ensure every new contract includes a probationary period, with a clearly defined duration and provisions for extension if needed. Contracts should also set out any limits on benefits (such as sick pay or bonuses) and allow for shorter notice periods during probation.
• Train and audit managers: Confirm that managers understand the purpose and process of probation periods and are equipped to manage them consistently. Regular check-ins, meetings, and reviews should be scheduled, with open communication maintained throughout. Training can help managers apply probation periods correctly and fairly.
• Set clear expectations from the outset: Define specific, measurable goals and responsibilities for employees at the start of probation. Discuss these objectives with the employee to ensure mutual understanding and to confirm that the role meets their expectations.
• Provide feedback and support: Offer ongoing feedback, mentoring, or support during the probation period to address issues early, recognise achievements, and encourage engagement.
• Document and communicate outcomes: Keep thorough records of meetings, performance assessments, and decisions. Communicate clearly whether probation has been successfully completed, extended, or ended, and provide reasons and next steps. Formal documentation helps maintain fairness and provides protection in the event of disputes.