Dismissing an Employee with less than 2 Years’ Service

Navigating the dismissal of an employee with less than two years’ service can feel like a legal minefield for many UK businesses, especially smaller firms without in-house HR expertise. While the law gives employers more flexibility in these early years, there are still crucial rules and risks to be aware of – ranging from discrimination claims to automatically unfair dismissal. This guide is designed to demystify the process, offering clear, practical advice so you can make confident, fair decisions that protect both your business and your people. Whether you’re facing a challenging situation now or simply want to future-proof your procedures, we’re here to support you every step of the way.

In This Guide

• Understanding the two-year rule and what it means for your business
• Identifying when dismissals are automatically unfair regardless of service length
• Protecting your business from discrimination claims and wrongful dismissal
• Best practice procedures for fair dismissals during early employment
• Preparing for upcoming legislative changes with the Employment Rights Bill
• Practical tools including an employee dismissal readiness assessment
• Frequently asked questions about dismissing short-service employees

Key Takeaways

• You have greater flexibility to dismiss employees with less than two years’ service, but significant legal protections still remain in place.
• Automatically unfair dismissal reasons apply from day one, including pregnancy, whistleblowing, and discrimination.
• Following fair procedures protects your business reputation and reduces legal risks, even when not legally required.
• The Employment Rights Bill is proposing to remove the two-year rule, introducing day-one unfair dismissal rights with a statutory probationary period.
• Proper documentation and clear policies are your best defence against potential claims.

Understanding the Two-Year Rule

What the Law Currently Says

Under current UK employment law, employees generally need at least two years of continuous service with the same employer to claim ordinary unfair dismissal. This means you can usually dismiss an employee with less than two years’ service without needing to follow extensive disciplinary procedures.

This flexibility exists because employees only gain statutory protection against unfair dismissal after accruing two years’ continuous service. If you’ve determined that an individual isn’t the right fit for your company, or there have been various conduct or capability issues, you may lawfully terminate their contract without further investigation or prior warning.

However, this doesn’t mean you have complete freedom to dismiss as you please. Several important legal protections remain in place from day one of employment.

When the Two-Year Rule Doesn’t Apply

Even with less than two years’ service, certain dismissal reasons are deemed “automatically unfair” and require no minimum service period. These protected categories include:

Family and Pregnancy Rights:

• Pregnancy, maternity, paternity, or adoption leave
• Requesting flexible working arrangements
• Taking time off for family emergencies

Statutory Rights and Legal Protections:

• Asserting rights to National Minimum Wage or holiday pay
• Requesting statutory sick pay entitlements
• Performing jury service

Workplace Safety and Integrity:

• Raising health and safety concerns
• Whistleblowing or making protected disclosures
• Acting as a health and safety representative

Trade Union and Industrial Relations:

• Trade union membership or activities
• Participating in legitimate industrial action

Discrimination: Your Day-One Legal Obligation

Understanding Protected Characteristics

Employees are protected from discriminatory dismissal from their first day of employment under the Equality Act 2010. The nine protected characteristics are:

• Age
• Disability
• Gender reassignment
• Marriage and civil partnership
• Pregnancy and maternity
• Race
• Religion or belief
• Sex
• Sexual orientation

Why Discrimination Claims Are Particularly Risky

Unlike ordinary unfair dismissal claims, there’s no cap on compensation for discrimination. Tribunals can also award damages for injury to feelings, making discriminatory dismissals potentially very expensive regardless of service length.

Discrimination can be subtle and isn’t always immediately obvious. For instance, dismissing someone for excessive absences without investigating whether these are disability-related could constitute discrimination. You must consider reasonable adjustments before proceeding with dismissal decisions involving potentially disabled employees.

Best Practice Procedures for Short-Service Dismissals

Whilst you’re not legally obligated to follow full disciplinary procedures for employees with less than two years’ service, implementing fair processes offers several advantages:

• Demonstrates your business is reputable and caring
• Maintains good employee relations and protects your reputation
• May help retain valuable employees who can improve with support
• Provides clear documentation to defend against discrimination claims
• Reduces overall legal risks and potential tribunal costs

Our Recommended Step-by-Step Process

1. Initial Assessment and Documentation

• Document specific performance or conduct concerns objectively
• Gather evidence and witness statements where relevant
• Consider whether issues might be disability-related or protected

2. Informal Discussion (Where Appropriate)

• Have an informal conversation about your concerns
• Give the employee opportunity to explain their perspective
• Consider whether additional support or training might resolve issues

3. Formal Meeting Process

• Invite the employee to a formal meeting in writing
• Clearly state that dismissal is a possible outcome
• Offer the right to be accompanied by a colleague or trade union representative
• Provide reasonable notice of the meeting date

4. During the Meeting

• Explain your specific concerns clearly and objectively
• Listen to the employee’s response and ask questions
• Consider alternatives to dismissal where appropriate
• Adjourn to consider their response if needed

5. Decision and Communication

• Make your decision based on all available information
• Communicate the decision face-to-face where possible
• Provide written confirmation with clear reasons
• Offer the right to appeal within a specified timeframe

Notice Periods and Final Pay

Statutory Minimums You Must Honour

Even when dismissing employees with less than two years’ service, you must still provide appropriate notice and pay. After one month of employment, employees are entitled to at least one week’s statutory notice. However, contractual notice periods may be longer and must be honoured to avoid wrongful dismissal claims.

Summary Dismissal for Gross Misconduct

You may dismiss without notice only in cases of clear gross misconduct, such as:

• Fraud or theft
• Physical violence or threats
• Serious health and safety breaches
• Serious insubordination or refusal to follow reasonable instructions

Even for gross misconduct, proper investigation and evidence are essential to justify summary dismissal.

Preparing for Legislative Changes

The Employment Rights Bill: What’s Coming

The Employment Rights Bill, which passed its third reading in the House of Commons in March 2025, is expected to significantly change dismissal rights. It is anticipated that the legislation will remove the two-year qualifying period, granting employees the right to claim unfair dismissal from day one.

Key Changes on the Horizon

Introduction of Statutory Probationary Period

The Bill will likely introduce an “initial period of employment” expected to last approximately nine months, during which you’ll be able to follow a simplified process to dismiss employees who are unsuitable. It is anticipated that this will require meeting with employees to discuss performance, with the right to be accompanied.

Redundancy Protections Remain

Importantly, the simplified process is not expected to apply to redundancy dismissals. You’ll need to follow the same fair process for all employees regardless of service length when making redundancies.

Extended Tribunal Time Limits

The time limit for bringing employment tribunal claims is proposed to increase from three to six months, giving employees more time to submit claims.

Managing Probationary Periods Effectively

Setting Clear Expectations from Day One

Probationary periods don’t affect an employee’s statutory rights, but they provide a structured framework for assessment. Use this time effectively by:

• Communicating clear performance expectations and objectives
• Providing thorough induction and training programmes
• Setting specific, measurable targets with realistic timescales
• Conducting regular feedback sessions and reviews

Documentation During Probation

Consistent record-keeping during probation is invaluable for demonstrating you’ve given employees a fair chance to succeed. Document:

• Specific performance or conduct concerns
• Training provided and support offered
• Feedback given and employee responses
• Improvement plans and target achievements

Common Pitfalls and How to Avoid Them

Contractual Obligations Can Override Statutory Minimums

Always follow contractual disciplinary procedures, regardless of service length. If your employment contract specifies certain procedures, you’re legally bound to follow them even if the employee has less than two years’ service.

Timing Considerations

Be aware that statutory notice can extend service to reach the two-year threshold. If an employee is approaching two years of service, carefully consider whether their service plus notice period would exceed two years, as this would trigger full unfair dismissal rights.

Consistency in Treatment

Ensure you treat similar situations consistently to avoid discrimination claims. If you’ve previously supported employees through similar issues, be prepared to explain why this case is different.

Hidden Business Costs

Beyond direct financial penalties, consider the broader business impact:

• Management time spent dealing with tribunal proceedings
• Potential damage to business reputation and employer brand
• Impact on remaining staff morale and productivity
• Difficulty recruiting replacement staff
• Possible negative publicity or social media attention

When to Seek Professional Help

Consider seeking HR and employment law advice when:

• Protected characteristics may be involved in the dismissal decision
• There are potential automatically unfair dismissal grounds
• The employee has raised grievances or concerns about discrimination
• Complex contractual issues arise
• Health and safety or whistleblowing concerns are involved

Building Your Support Network

Small businesses rarely have in-house HR expertise, making external support crucial. Consider developing relationships with:

• Employment law solicitors for complex cases
• HR consultants for policy development and training
• Industry associations offering guidance and resources
• ACAS for free, impartial advice and conciliation services

Take Action with Confidence

Managing employee dismissals doesn’t have to be a source of stress for your business. With the right knowledge, procedures, and support, you can handle these situations fairly and legally whilst protecting your business interests.

The employment law landscape is evolving rapidly, particularly with the upcoming Employment Rights Bill changes. Now is the perfect time to review your current practices and ensure you’re prepared for both today’s requirements and tomorrow’s challenges.

Ready to strengthen your employment practices?

Norton Loxley specialises in helping small and medium-sized businesses navigate complex employment law situations with confidence. Our experienced team provides practical solutions tailored to your business needs.

Whether you need help developing robust dismissal procedures, updating your employment contracts for upcoming legislative changes, or guidance on a specific dismissal situation, we’re here to support you every step of the way.

Contact Norton Loxley today to discuss how we can help protect your business and ensure you’re fully prepared for the changing employment law landscape. Don’t wait until you’re facing a tribunal claim – invest in proper procedures and professional guidance now.

Frequently Asked Questions

Can I dismiss someone immediately if they have less than 2 years’ service?

Not necessarily. Whilst you have more flexibility with employees under two years’ service, you must still provide appropriate notice as specified in their contract. Immediate dismissal (summary dismissal) is only justified for gross misconduct, and you’ll need clear evidence to support this decision. You also need to ensure the dismissal isn’t for an automatically unfair reason or discriminatory.

Do I need to follow disciplinary procedures for employees in their probationary period?

There’s no legal requirement to follow full disciplinary procedures for employees with less than two years’ service. However, you should still follow any procedures specified in their employment contract. Following fair procedures is also good practice as it reduces the risk of discrimination claims and demonstrates professional employment practices.

What’s the difference between unfair dismissal and wrongful dismissal?

Unfair dismissal relates to the reason for dismissal and whether proper procedures were followed. Wrongful dismissal is about breach of contract, typically failing to provide proper notice or pay. Employees can claim wrongful dismissal regardless of their length of service if you breach their contract terms.

Can I dismiss someone for poor performance without warnings if they have less than 2 years’ service?

Yes, you may be able to dismiss for poor performance without formal warnings if the employee has less than two years’ service. However, it’s good practice to provide feedback and opportunity for improvement where possible. Ensure the dismissal isn’t related to a disability or other protected characteristic, as this could lead to discrimination claims.

What notice period must I give to employees with less than 2 years’ service?

You must give at least the statutory minimum notice: one week after one month of service. However, the employment contract may specify a longer notice period, which you must honour. During probationary periods, notice periods are often shorter, but check the specific contract terms.

Am I safe from tribunal claims if I dismiss someone with less than 2 years’ service?

No, you’re not completely safe. Whilst employees can’t claim ordinary unfair dismissal, they can still bring claims for automatically unfair dismissal, discrimination, or breach of contract. These claims can be made regardless of service length and can result in significant compensation.

How should I document issues with an employee I’m considering dismissing?

Keep objective, factual records of specific incidents, including dates, times, witnesses, and details of what occurred. Document any training provided, support offered, and the employee’s response to feedback. Avoid personal opinions or subjective judgements in your records.

Can I dismiss someone who’s just announced they’re pregnant?

Dismissing someone because they’re pregnant is automatically unfair regardless of service length. If you need to dismiss a pregnant employee for legitimate business reasons, you must be able to demonstrate the decision is entirely unrelated to their pregnancy and follow scrupulously fair procedures.

Should I always offer an appeal process for dismissals?

Yes, offering an appeal process is good practice and demonstrates fairness. Even though it’s not legally required for employees with less than two years’ service, it can help resolve issues and shows you’ve acted reasonably. This can be particularly important in defending against discrimination claims.