Recruitment and staffing is the UK sector most exposed to January's unfair dismissal reforms, topping the Exposure Index in Unfair Dismissal: The Six-Month Rule, according to a new report from HR software company HRLocker. The research surveyed 1,500 HR decision-makers and business owners.
The Exposure Index ranks twelve industries on three measures: the share of firms dismissing an employee at six to twenty-four months' service in the last three years, the share doing so three or more times, and the share with no dedicated system for recording performance concerns. Recruitment scores 66 out of 100, ahead of hospitality (62), health and social care (61) and construction (60). At the other end sit financial services and legal services, both at 49.
Volume puts recruitment top. More than nine in ten agencies (93 per cent) have dismissed someone between six and twenty-four months' service in the last three years, against an all-sector average of 80 per cent, and almost half (47 per cent) have done it three or more times, against an all-sector average of 27 per cent. From January, every dismissal in that window can be challenged by an unfair dismissal claim.
Churn is where recruitment's exposure starts. More than four in ten agencies (43 per cent) report annual staff turnover of 50 per cent or more, against 20 per cent across the economy. The same share (43 per cent) of dismissing agencies cite missed targets, more than double the 20 per cent average and the highest of any industry. A target is harder to evidence than conduct. It exists in the record only if someone set it, agreed it, reviewed it and wrote down what happened. One in five agencies (21 per cent) name manager memory or a verbal conversation as one of the ways they record performance concerns, and a further 12 per cent record nothing at all.
93% of recruitment agencies dismissed an employee within the six-to-24-month service window during the past three years.
Record-keeping is part of the risk. At 58 per cent, the share of agencies without a dedicated system is only marginally better than the all-industry average of 62 per cent. However, neither is reflective of best practice. No sector has a majority of employers keeping dedicated performance records. Confidence runs ahead of capability across the market, with two-thirds of employers (65 per cent) confident they could produce a complete record for someone dismissed at nine months, whether or not they have a dedicated system. In short, the recruitment sector does far more of the things the records will have to defend, often concerning employees with short tenures and regular performance targets.
Financial services and legal services sit lowest on the Exposure Index, both at 49 per cent. Turnover of 50 per cent or more runs at 11 per cent in financial services and 12 per cent in legal services, against 43 per cent in recruitment. Both made three or more such dismissals at 18 per cent, against recruitment's 47 per cent, even though financial services dismisses as often as the average industry (80 per cent). Records barely separate them, with no dedicated system in 50 per cent of financial services firms, 55 per cent of legal firms and 58 per cent of recruitment agencies.
Almost six in ten agencies (57 per cent) say they will dismiss earlier once the qualifying period drops, in line with the 55 per cent national average. From 1 October 2026, the window for bringing a tribunal claim doubles from three to six months. On 1 January 2027, the qualifying period falls from two years of service to six months and the compensation cap, currently the lower of £123,543 or fifty-two weeks' gross pay, is removed. An estimated 83,000 people working in recruitment and staffing firms of 10 to 499 staff sit inside that window.
Consultant Solicitor at Cognitive Law, Amy Harvey, said: "Businesses that rely heavily on performance metrics and probationary assessments are likely to feel the impact of these reforms particularly acutely. Performance concerns, targets and probationary reviews can all provide legitimate grounds for dismissal, but employers will increasingly need contemporaneous evidence showing how concerns were identified, communicated and managed before a dismissal decision is made."
Crystel Robbins Rynne, CEO of HRLocker, said: "Agencies already hold the meetings. Targets get set, dashboards get read, one-to-ones happen every week. Almost none of it reaches the employment file, so when someone is let go on numbers there is nothing to show for it. A defensible record is three dated lines after a conversation you were already having: what is going well, what needs work and what was agreed. Most agencies could start that on Monday."
The full Exposure Index covering fifteen industries, the recruitment and staffing sector spotlight and a practical guide to building a defensible performance record are available at hrlocker.com/reports/unfair-dismissal-uk-six-month-rule/
Methodology
Unfair Dismissal: The Six-Month Rule surveyed 1,500 UK HR decision-makers and business owners at firms employing 10 to 500 people, as well as 500 employees of those firms. Research was conducted by HRLocker between 3 and 14 August 2026. The recruitment and staffing sample was boosted to n=150 to support sector-level analysis. All figures are reported unweighted, on the achieved sample. Percentages are rounded to whole numbers, so may not sum to exactly 100%, and multi-select questions sum to more than 100%.
