Last week a finance director forwarded me a law firm's briefing with one line typed above it, asking whether this changes what a bad hire costs.

It does. The Employment Rights Act scraps the limits on compensation for unfair dismissal, according to law firm Lewis Silkin's summary of the Act. Both the 52 week cap and the statutory cap, currently £123,543, are abolished for any dismissal that ends on or after 1st January.

There used to be a ceiling on what getting a senior hire wrong could cost you at a tribunal, and that ceiling goes. The same Act cuts the qualifying period for an unfair dismissal claim to six months, and I'll come back to why that matters.

My first reaction was to file it under HR's problem.

But it isn't, at least not when the person in the seat is a financial controller or a finance director. Those are the hires where the old limits did the quietest work, because the salaries are high enough that a cap, rather than the real loss, set the ceiling. Take the cap away and a claim is measured against what the person actually lost. And the number looks very different.

What changes for employers on 1st January?

Two things change together. The qualifying period for ordinary unfair dismissal falls from two years to six months, and the compensation cap disappears. Lewis Silkin notes that the basic award and statutory redundancy pay stay as they are, and that most tribunal claims can already be brought within six months rather than three for anything that happened on or after 1st October.

Side by side, the two changes are less comfortable than either one alone, because more people can claim, they get longer to do it, and what they can recover has no ceiling.

Who is already inside the new window?

More people than you'd think. Pinsent Masons points out that because the six-month rule applies to dismissals on or after 1st January, it effectively covers anyone engaged from 1st July. Someone who started on the 1st of August reaches six months on the 1st of February, by which point the compensation cap will already be gone.

Think about who you've taken on since the summer. A finance manager who started in September, a head of finance who joined after a long search, the interim who quietly went permanent. All of them are walking towards a line nobody on your side drew. And nearly every one of those hires was made under the old arithmetic.

The old arithmetic shaped behaviour more than anyone admits. It set how long people waited before asking the awkward question.

I've lost count of the offer letters I've seen where the probation clause was lifted from a template written for a different kind of job. The first real conversation about whether the person was working out happened in month five, with a diary clash and no notes from month two. It worked well enough when the downside was bounded. But it looks thin when it isn't.

Does a probation period still protect you?

Not in the way many employers assume. A probation period is a contractual arrangement, and as I understand it, it doesn't switch off anyone's statutory rights. And a six-month probation ends on the same day the employee qualifies for protection. There is very little room between a decision and a claim.

I'm a recruiter, not a solicitor, so take the detail of your own contracts to your employment lawyer. I can say that senior finance people read these changes quickly, and the good ones will ask about them at offer stage, usually with a polite smile that says they've already read up.

What does an uncapped claim do to the price of a wrong hire?

Until now, the worst case for an unfair dismissal claim was bounded by the cap. From 1st January, with the cap gone, compensation is open to follow what the person actually lost. For someone in a senior finance seat, that may include the time it takes to find an equivalent role, and in my experience that is rarely quick.

The cost of a bad finance hire now includes a line nobody can price in advance, and fewer bad hires is the only dependable way to shrink it, which is a less exciting answer than a clever clause.

What about interims and contractors?

Lewis Silkin also flags a rule aimed at businesses that dismiss staff in order to replace them with contractors or agency workers doing substantially the same work, which will generally be treated as automatically unfair, with a short list of exceptions.

The temptation I see is a business that decides a permanent finance manager isn't landing, and reaches for an interim to paper over the gap without ever having the hard conversation. But that route is getting narrower. If cover is truly needed, it should be for a reason you could explain to a tribunal in two sentences.

Fix the evidence before you fix the contract

Most of the damage in a failed senior hire is baked in before the offer goes out, which is why I've argued before that the best finance hires happen before you need them. A reference that says someone was lovely to work with tells you about the weather in their last office.

It tells you nothing about whether they can close a month-end on time.

Ask the candidate to walk you through a forecast they built, and the one thing they would change about it. Write down what good looks like for the first ninety days, in terms two sensible people would agree on. Diary the review dates before day one, not when someone starts to worry.

None of that is clever. It just has more riding on it now. Nobody ever got a standing ovation for a well-diarised review. And it's the part of the process where a recruiter who only places finance people earns their fee, because we've watched the same misses show up in week three often enough to know where to push.

The ceiling that used to sit over a bad senior hire comes down on the 1st of January. Better to find out what's underneath before anyone signs an offer letter.

If there's a finance seat open or about to be, bring it to our finance recruitment team and we'll talk through how that hire should be assessed and reviewed with the new rules in mind.