Businesses urged to prepare now for unfair dismissal changes under Employment Rights Act 2025

SUTTON COLDFIELD, U.K. - EntSun -- Businesses are being urged to review their hiring, probation and documentation processes now to avoid being exposed to unfair dismissal claims under the forthcoming Employment Rights Act 2025.

The warning comes from Birmingham-based recruitment entrepreneur Jessie Raby, founder of new placement intelligence platform PRODICTA which has been launched to help employers, HR teams and recruitment agencies make hiring decisions that are both commercially effective and legally defensible.

As part of employment reform, businesses will have to demonstrate that hiring and dismissal decisions are fair, objective and properly documented. From January 2027, employees will have unfair dismissal protection from their first day of employment. The two-year qualifying period is being replaced with a six-month initial period and the statutory compensation cap is being removed entirely.

Recent research from the Chartered Institute of Personnel and Development shows concern is already growing across UK businesses, with 37% of employers planning to reduce permanent hiring as a result of the changes, while nearly three quarters expect employment costs to rise.

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At the same time, businesses are already facing mounting financial pressure from poor hiring decisions. Industry estimates from the Recruitment and Employment Confederation suggest a typical bad hire can cost between £30,000 and £50,000, rising to more than £100,000 for mid-management roles.

Jessie said: "Most organisations are still hiring based on CVs and interviews - methods that were never designed to produce the kind of evidence employers now need.

"The question is no longer simply 'did we hire the right person?' but 'can we prove it?'"

Jessie believes the biggest risk for many employers is not the legislation itself, but the gap between the new expectations and existing workplace processes.

"Many businesses still rely heavily on instinct, informal interviews and inconsistent probation management," she said.

"But if a dismissal decision is challenged, employers will increasingly need to demonstrate what criteria were used, how candidates were assessed, what support was offered during probation, and why decisions were made.

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"In many organisations, that level of documentation simply doesn't exist."

Jessie designed and developed PRODICTA - https://prodicta.co.uk/ - after years working in recruitment and seeing this gap, and its impact, first-hand.

The platform uses realistic role-specific work simulations instead of personality tests or theoretical assessments, helping employers assess how candidates actually perform in real job situations. It also combines structured probation tracking, documentation and compliance tools into one system, helping organisations evidence every stage of employment from hiring through to probation and performance management.

Jessie is urging employers not to wait until 2027 before reviewing their processes.

"A candidate hired today could easily fall within the new framework by the time issues arise," she added.