Three ways hiring needs to change under the Employment Rights Act -

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June 25, 2026

Three ways hiring needs to change under the Employment Rights Act

With increased risk at the start of employment and costs rising, employers can’t afford to get hiring wrong by waiting for legislation to be enacted, says Claire McCartney

As labour market pressures mount and operational costs increase, the Employment Rights Act 2025 (ERA 2025) is poised to significantly reshape how organisations approach hiring and workforce planning.

The Act changes how employers recruit, structure roles, onboard people and manage risk from the moment a vacancy is approved.

With the unfair dismissal qualifying period set to fall from two years to six months, the reforms will bring risk forward in the employment lifecycle.

That makes mid-2026 a critical window for HR to review hiring and planning strategies ahead of unfair dismissal changes in January 2027.

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Organisations that proactively adapt their approach in line with the Act will be best placed to manage these risks, unlock stronger workforce performance and deliver better business outcomes.

But against this backdrop, the key question for HR is how should it respond in practice?

With a shorter window to identify and address issues, employers will need to tighten how they hire, onboard and manage new starters from the outset of the employment lifecycle. Three areas stand out as immediate priorities:

1. Get hiring right first time

Several changes being introduced under the Act, including expanded Statutory Sick Pay and the reduction in the qualifying period for unfair dismissal, increase both the risk and the cost of poor hiring decisions.

The CIPD’s recent Labour Market Outlook survey shows most employers expect the ERA 2025 to increase their employment costs, with many anticipating reduced hiring and a rise in workplace conflict.

With the potential for higher costs if hiring decisions don’t land well, HR teams need to review recruitment processes to ensure candidates are well matched to both the role and the organisation. This will also reduce the likelihood of capability or conduct issues later on.

Workplace policies and employment contracts also need to be updated to reflect the Act. In addition, HR will need to strengthen how a candidate is assessed for suitability using structured interviews with clear scoring criteria to ensure consistency.

People professionals will also need to support time-poor or inexperienced recruiting managers with practical guidance to help them follow this process and make well-informed decisions.

2. Make onboarding and probation count from day one

With less time to assess new hires before legal risk increases, the early days of employment matter more than ever.

From 1 January 2027, employers will have six months, rather than the current two years, to ensure new starters are performing as expected.

It’s worth noting that the new, reduced qualifying period will apply immediately to anyone with at least six months’ service on 1 January next year so includes anyone hired from July 2026.

Now is the time for HR to review induction processes, onboarding and contractual probation periods.

This could include considering whether probation periods should be shortened to five or five and a half months to ensure decisions can be made within the six-month window and avoid potential unfair dismissal risks.

It will also be crucial to strengthen how new starters are managed during this period. HR professionals will need to support managers to set clear objectives, have regular check-ins and address any issues early on.

People managers will need a clear structure and objectives for new starters, and they should document concerns and the support provided to ensure decisions are fair, consistent and well evidenced.

A stronger focus on hiring quality, onboarding and early support won’t just reduce risk, it will enable individuals to contribute more quickly and perform at their best.

3. Rethink flexibility beyond zero-hours

Workforce flexibility will need a rethink as the Act will change how zero-hours and short-hours work can be used.

The ERA 2025 changes include new rights to guaranteed hours and better notice of shifts for employees, meaning arrangements may become more complex.

Organisations may want to explore alternatives, including annualised hours contracts or increasing the use of temporary workers or self-employed contractors.

HR should also conduct a risk assessment to identify any areas of risk and opportunity to help inform wider workforce planning.

A more deliberate, forward-looking approach will help organisations maintain flexibility while complying with requirements and avoiding unintended costs. It will also ensure their workforce is set up to deliver strong performance outcomes.

The Employment Rights Act 2025 will fundamentally shift how organisations hire, manage risk and structure their workforce.

The window to prepare is now and HR teams that move early, reviewing practices, strengthening processes and planning ahead, will be positioned not just to keep up, but to lead through the change.