For many businesses, the first six months of employment have traditionally provided breathing room. New employees have time to settle into their role, managers have time to understand their strengths and weaknesses, and any questions around performance or suitability can be addressed as the working relationship develops. The Employment Rights Act 2025 is changing the importance of that period.
With the qualifying period for unfair dismissal due to reduce from two years to six months, the early months of employment will become a much more significant window for employers. For SMEs in particular, where onboarding and probation processes can often be relatively informal, this creates a need to think much more carefully about how new employees are recruited, supported, assessed and managed from their first day.
For Sarah Birkenshaw, Founder of Quest Consulting Services, this makes one point in the employee journey particularly important: month four.
As Sarah explains:
“Previously, if a hire wasn’t working out even as far as month 18, an SME had time to ‘wait and see.’ That luxury is gone. Organisations now need to move their final ‘stay/go’ decision to Month 4 or 5.”
This does not mean organisations need to become less patient with new employees. It means the first six months need to become a much more deliberate part of the employee experience, with clearer expectations, better management and earlier conversations when something is not working.
Why month four becomes an important checkpoint
Probation periods are already a familiar part of employment, but their effectiveness varies considerably between organisations. Some businesses have structured processes with regular reviews and clearly defined objectives, while others treat probation as a relatively informal period that culminates in a review after three or six months.
Sarah believes the changing legislation makes that latter approach increasingly difficult.
“With the qualifying period for unfair dismissal dropping from two years to six months, the ‘probationary period’ is no longer a ‘nice-to-have’ adjustment phase; it is the most critical risk-management window in your business.”
Waiting until the end of a six-month probation period to have a meaningful conversation about performance leaves very little time to address problems that may have been developing for months. Sarah therefore recommends bringing a significant review point forward to around month four, creating time for employers to assess how somebody is progressing and act appropriately where there are concerns.
This requires organisations to know what good performance should look like before that conversation takes place. If expectations have remained unclear throughout the first four months, a more formal review will do little to improve the quality or fairness of the decision being made.
Good probation starts on day one
A meaningful month four review therefore begins much earlier than month four. Sarah argues that businesses need to establish clear expectations from the beginning of employment, giving both the employee and their manager something tangible against which progress can be discussed, as she explains:
“You need clear expectations of what is needed from a new hire in their first 6 months and so this starts with clear job descriptions, KPIs and measures to track that initial learning period and a more formal review process so discussions are taking place where there may be concerns.”
For employees, this creates clarity around what they have been recruited to achieve and how their progress will be assessed. For managers, it creates a framework for giving feedback throughout the probationary period (rather than relying on instinct when the formal review arrives). It also makes performance conversations easier to have earlier. If somebody is struggling after six weeks or three months, there should already be enough clarity to identify where expectations are not being met, discuss what support is required and establish whether progress is being made.
By month four, the organisation should therefore have a much clearer picture of whether the employee is succeeding in the role and whether any remaining concerns can realistically be resolved.
Culture fit needs more than gut feeling
This increased emphasis on the first six months also places greater importance on what happens before an employee joins.
For many SMEs, recruitment has historically relied heavily on personal judgement. Skills and experience matter, but so does whether somebody feels right for the organisation and its existing team. Sarah believes there is still a place for those judgements, but argues that businesses will increasingly need evidence alongside them as she believes that “SMEs often hire based on ‘culture fit’ or ‘gut feeling.’ To mitigate risk, the first six months must now be data-driven.”
Understanding organisational culture becomes particularly important here. Hiring for culture fit is difficult if the business itself has no clear picture of the behaviours, expectations and working environment that define its culture. Greater insight can help organisations understand what they are actually recruiting people into, while more structured recruitment can help establish whether a candidate has the skills, behaviours and expectations needed to succeed within that environment.
As Sarah explains, this does not require businesses to abandon the instincts that have previously informed recruitment decisions:
“The recruitment process needs to maintain those cultural fits and ‘gut feelings’ but be accompanied by data driven competence testing style questions so you are able to identify early if a candidate is a potential right match.”
Getting this right before somebody joins reduces the pressure placed on probation to correct a recruitment decision that was poorly understood from the outset.
A stronger process can support a stronger culture
For smaller organisations, greater structure can understandably feel uncomfortable. Many SMEs have developed cultures around close relationships, flexibility and relatively informal management, and introducing more formal checkpoints can feel at odds with that way of working.
Sarah’s view is that the Employment Rights Act will make some of this change unavoidable: “For many SMEs, ‘culture’ has historically been informal, built on trust and ‘getting stuck in.’ However, the Act introduces high-stakes consequences for maintaining that informality.”
The challenge is therefore to make greater structure useful to employees and managers, rather than allowing it to become a purely administrative exercise.
Clear job descriptions help employees understand what is expected of them. Regular feedback gives people an opportunity to improve before problems become entrenched. Documented objectives give managers a fairer basis for assessing performance, while structured reviews create dedicated opportunities to discuss progress, concerns and support.
When implemented in this way, greater discipline around probation does not have to undermine culture. It can give both sides greater clarity about where they stand and make difficult decisions less dependent on subjective judgement.
The month four conversation should not be a surprise
Perhaps the most important implication of Sarah’s argument is that a month four review cannot compensate for four months of poor management. If the first time an employee hears that their performance is causing concern is during a formal checkpoint, the organisation has already missed opportunities to address the issue.
The value of bringing the decision point forward comes from everything that happens before it. Managers need to set expectations early, provide regular feedback and raise concerns as they emerge. Employees need a genuine opportunity to understand what is required and demonstrate progress. Month four then becomes an opportunity to take stock rather than deliver a surprise verdict. The business can look at the evidence gathered during the employee’s first few months, consider the progress that has been made and decide what needs to happen next.
For Sarah, this represents a significant change in mindset for SMEs accustomed to taking a more relaxed approach to probation as she says that “the message is clear: Wait and see is no longer a strategy. The first 180 days of employment are now a high-speed track.”
Rethinking the first six months of employment
The Employment Rights Act 2025 places greater significance on decisions made during the early stages of employment, but preparing for that change involves more than adding another meeting to the calendar.
Businesses need to think about the entire journey from recruitment through onboarding, early performance management and probation. They need clearer expectations from the beginning, managers who are confident having conversations when concerns arise, and meaningful checkpoints that allow both employer and employee to understand how the relationship is progressing.
For SMEs, Sarah’s recommendation to introduce a meaningful month four review provides a practical point around which that process can be built. By that stage, organisations should have enough information to understand whether somebody is succeeding, where support is needed and whether there are concerns that need to be addressed before the end of the six-month period.
Sarah uses the own Government’s analysis to frame this argument, with “Government analysis predicting an additional 9,000 ACAS early conciliation referrals a year due to these changes, SMEs without a “Month 4″ review policy will be the primary contributors to this spike.”
This also creates an opportunity to look more closely at the culture surrounding recruitment and management. A successful hire depends on more than finding somebody who appears to fit. It requires clarity about the culture they are joining, what will be expected of them and how they will be supported to succeed within it.
As the Employment Rights Act changes the significance of those first six months, businesses that have historically relied on informal processes will need to become more deliberate. Sarah’s message to SME leaders is ultimately a simple one: waiting until the end of probation to decide whether a new hire is working is becoming an increasingly risky approach. The work required to make that decision fairly and confidently needs to start from day one.