25 March 2026 
Emma Walton-Pond, Communications Officer
In our previous blogs, we have given an overview of the reforms set out in the Employment Act 2025 (the Act) and looked in detail at the provisions on trade unions.
We now look at one of the most significant changes in the Act, namely the reduction of the unfair dismissal qualifying period from two years to six months. This will create challenges for universities, who will have much less time to identify underperformance, make decisions as to suitability and complete a dismissal process before unfair dismissal rights kick in.
Employees who have six months’ service or more on 1 January 2027 will immediately have unfair dismissal rights. Universities should therefore review their probation policies now, and make changes from mid-2026 onwards, rather than leave it until nearer the implementation date.
Also effective from 1 January 2027, the cap on compensatory awards for unfair dismissal will be removed. This has the potential to increase financial exposure for unfair dismissal, particularly in the case of disputes with senior employees who earn above the current statutory cap threshold (set to increase from £118,223 to £123,543 on 6 April).
Impact on probation management
The reduction of the qualifying period for ordinary unfair dismissal will impact how universities manage probation, and this will need to be reflected in internal HR processes. So, what does this mean in practice?
Strengthen recruitment processes
It will be even more crucial for universities to get recruitment decisions right. This means implementing robust selection criteria and interview processes, conducting thorough reference checks and ensuring role requirements and expectations are clearly defined before hiring.
Shorten probation periods
Universities will need to consider implementing reduced probation periods for new staff to allow sufficient time to go through the end-of-probation process and for any dismissal to take effect before the six-month point. A three or four-month probation period would provide adequate time to do so and would allow for the probation period to be extended by up to a month, where this is appropriate and permitted by the contract.
Academic probationary periods pose a particular problem as it is not unusual for these to be a year or more to allow sufficient time to assess academic outputs. Universities will need to weigh up whether to move everyone onto shorter probation periods, with the option to extend, or to keep the longer period and ensure that managers know to follow a fair process if there is a capability dismissal at the end of the period.
Universities should review and update employment contracts to reflect shorter probation periods and ensure probation clauses allow for regular review and termination before the six-month point.
Implement rigorous probation management
Universities should have a clear and consistent probation process, including:
Train managers on handling probation
Managers may need additional training on how to manage probation in light of the new rules, including the importance of recognising and addressing performance concerns at an earlier stage and how to carry out an end-of-probation process within the timescale.
Ensure procedurally fair dismissals in all cases
Regardless of service length, all dismissals must follow a fair procedure, including conducting reasonable investigations, providing opportunities to respond, holding fair hearings with the right to be accompanied, and offering appeals.
Consider notice periods
Universities will need to bear in mind the statutory minimum one-week notice period for employees with less than two years' service. Where no notice is given (or a payment in lieu of notice is made), this must be added to the date of dismissal and included within the period of qualifying service. This means that an employer cannot dismiss in the last week of the first six months of employment to circumvent the employee gaining unfair dismissal rights.
Broader practical implications
As well as the impact on the day-to-day management of staff on probation, the new rules will also have broader practical implications for universities.
Prepare for more claims
Universities should anticipate higher volumes of Early Conciliation notifications from ACAS and tribunal claims, as more employees will become eligible to bring unfair dismissal claims. This will require universities to allocate additional HR and legal resources, train managers on proper dismissal procedures, and establish clear escalation protocols for dismissal decisions.
Anticipate delays in the employment tribunal system
There may also be delays in the tribunal system. Universities should therefore factor potential delays into their planning, consider alternative dispute resolution methods or settlement agreements, where appropriate.
Reconsider approach to settlement negotiations
Abolishing the compensation cap has the potential to result in larger, more complex compensation claims and may affect settlement negotiations. There will be much more uncertainty about the potential for compensation and the claimant's opening position is likely to be higher, making settlement discussions more challenging and protracted.
Extend document retention policies
Taking into account the ACAS early conciliation process of 12 weeks (which can stop the clock on the time limit for bringing an unfair dismissal claim), employees could have up to 9 months to bring a claim. It is important that universities retain all relevant documentation (e.g. investigation notes, meeting records, correspondence, performance reviews, warnings and decision-making rationale) at least for this period.
Key actions for universities
Tom Long, Partner, Shakespeare Martineau
Susannah Nicholas, Professional Support Lawyer, Shakespeare Martineau
Important information
This article provides general guidance only and should not be treated as legal advice.
