Employers must be careful when dismissing an employee  who's been with them for less than two years. Often, employers don't have to explain why they're firing someone or stick to a strict process if the employee has worked there for under two years. But, there are still legal issues to think about.

Under the Employment Rights Act of 1996, employees are protected from unfair dismissal, but only after they've worked continuously for the same employer for two years. This means that if someone has been an employee for less than two years, you can usually dismiss them without needing a strong reason or following a detailed process. Although a fair process should be followed in any event.

However, this doesn't apply in cases of discrimination, whistleblowing, or certain other types of unfair dismissal, which are covered by the Equality Act 2010. In these situations, employees or job applicants are protected from discrimination whether during the application process or from day 1 of their job..

If an employee hasn't been with you for two years, you can end their contract without needing to investigate further or give them a warning. You don't have to justify your decision or how you handle the dismissal. 

But, if someone has worked for you for two years or more, you must have one or more of the five fair reasons to dismiss them, as stated in the Employment Rights Act 1996. These reasons are things such as their ability to do the job, their behaviour, redundancy, breaking a legal rule, or another significant reason. If you dismiss someone for one of these reasons, you need to show that you were reasonable in your decision and that you followed a fair process and the outcome was proportionate to the wrong done.

It's important to remember that only employees can claim unfair dismissal. This doesn't apply to self-employed people or others who aren't considered employees under employment law. Also, every employee, no matter how long they've worked for you, should get at least the national minimum wage.

When you need to dismiss an employee who has been employed for less than two years, they might still be able to claim wrongful dismissal. This can happen if they're fired without being given notice or pay instead of notice. Wrongful dismissal means you've breached the terms of their contract, by not giving them their contractual notice or payment in lieu of notice.

The shortest notice you must legally give, known as statutory notice, is one week if the employee has been with you for more than a month but less than two years. But if their contract says they should get more notice, then you need to follow that.

You can fire someone immediately without notice or pay in serious cases, like if they've committed a major wrongdoing such as fraud, theft, violence, being drunk or on drugs at work, seriously breaking health and safety rules, or not following important orders.These are known as acts of gross misconduct.

When firing someone with less than two years of service, it's important to work out their notice pay correctly. This includes pay for the notice period in their contract, or the legal minimum notice if the contract doesn't say. Also, you should pay them for any holiday they've accrued but not taken.

To Summarise, if you're dismissing an employee who does not have two years continuous service, you must still give them the notice period they're legally entitled to, whether it's in their contract or the minimum the law requires. If you don't, they could claim wrongful dismissal.

When dismissing an employee with less than 2 years of service, it is important to be aware of the potential pitfalls that could arise beyond ordinary unfair dismissal. These include automatically unfair dismissal, unlawful discrimination, and breach of contract.

Automatically Unfair Dismissal

An employee can claim automatically unfair dismissal if they are dismissed for certain reasons, such as pregnancy and maternity, asserting statutory rights, whistleblowing, or raising a health and safety concern. There are around 60 different grounds upon which an employee can claim automatically unfair dismissal.

It is important to note that there is no qualifying period of service for an employee to be eligible to claim automatically unfair dismissal. Once an automatically unfair reason for dismissal has been established, you will no longer be able to justify or defend your decision to dismiss. There will also be no need for the employee to show that you failed to follow a fair procedure. The dismissal will be considered automatically unfair, with no further consideration as to either the reasonableness or procedural fairness of your actions.

If the employee is able to establish one of the automatically unfair reasons prohibited by law, the claim will succeed. You may then be ordered to reinstate or re-engage them. You will also be ordered to pay an award of damages comprising of both a basic and compensatory award you may also be required to pay the employee compensation for injury to feelings..

Unlawful Discrimination

If you dismiss an employee for a reason related to a protected characteristic, this could amount to both unlawful discrimination and automatically unfair dismissal. The Equality Act 2010 defines a protected characteristic to include age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

An employee can claim unlawful discrimination without any qualifying period of service. Damages for a discriminatory dismissal are also calculated in a similar way to an unfair dismissal claim in terms of compensation for loss of earnings, although there is no cap on compensation in discrimination cases.

If a dismissal is related to a protected characteristic, you could be liable to pay the former employee an unlimited sum of money, regardless of how long they have worked for you. An award for injury to feelings is also payable where a finding of discrimination is made.

Breach of Contract

Even though you do not necessarily need to justify your decision to dismiss an employee with less than 2 years’ service, you should still follow a fair process in cases where there is a contractually binding disciplinary policy or dismissal procedure set out under the employee’s contract of employment.

Any failure to follow these procedures may constitute a breach of contract for which the employee could claim damages against you. For example, failing to undergo an investigation into any misconduct or capability issues, or failing to provide a written warning prior to terminating someone’s employment.

It is important to note that you should follow a fair process, even if you do not have to justify your decision. In cases where an employee has less than 2 years’ service, you should still adhere to the terms of their contract of employment to avoid a claim for breach of contract or wrongful dismissal. The outgoing employee is entitled to the longer of their contractual or statutory notice period and pay.

In conclusion, when dismissing an employee with less than 2 years’ service, you should be mindful of the potential pitfalls beyond ordinary unfair dismissal. These include automatically unfair dismissal, unlawful discrimination, and breach of contract. You should follow a fair process in cases where there is a contractually binding disciplinary policy or dismissal procedure set out under the employee’s contract of employment. Any failure to follow these procedures may constitute a breach of contract for which the employee could claim damages against you.

As an employer, it is important to follow a fair procedure when dismissing an employee to avoid potential legal action and protect the company's reputation. By following a fair procedure, you can also demonstrate to other staff that you are a caring and reputable employer, willing to give people the opportunity to improve where there have been capability or conduct issues.

When dismissing an employee with less than two years of service, it is best practice to invite them in writing to a formal meeting, advising them that this meeting might result in their dismissal. You should also provide them with a right to be accompanied at this meeting, explaining that they or their representative will be given an opportunity to respond.

Following the meeting, carry out any necessary further investigations, in this way demonstrating that you have listened to their response and are now acting on this. Where no further investigations are needed and you have sufficient evidence to make a final decision, adjourn for a short period of time to demonstrate you are considering the situation and did not reach a conclusion before they had a chance to respond.

Where you need more time to decide, reconvene at a later date so that you may formally notify the employee of your decision face-to-face. Where it is not considered appropriate to issue them with a written warning, or other form of disciplinary sanction, you should also notify them of your decision to dismiss in writing, providing reasons why and giving them the right to appeal within 5 days of your dismissal decision.

It is important to remember that when dismissal is on the grounds of ill health or capability to do the job, then consideration must be given as to whether there could be an underlying disability that is impacting on an employee’s performance for which reasonable adjustments may need to be made.

In addition, employers should be aware of the ACAS Code of Practice on disciplinary and grievance procedures. This code provides practical guidance on handling disciplinary and grievance situations in the workplace and sets out the principles of fairness and transparency that should be followed by employers.

When dismissing an employee, it is important to have a fair reason for doing so. This could be due to conduct or capability issues, redundancy, or gross misconduct. Whatever the reason, it is important to document the process in writing and keep a clear paper trail of your decision-making to demonstrate that the reason for dismissal was not unlawful.

By following these best practices, you can protect your reputation, maintain good employee relations, and mitigate the risk of legal action being taken against you.

If you're facing a dismissal and need advice, our HR and employment law specialists can guide you. We can help you understand your rights and options, represent you in tribunal, and advise you on legal action. We can also help you claim compensation, including a compensatory award and costs. Contact our advisers today to protect your interests and minimise legal risks.

In most cases, you can dismiss an employee with less than 2 years of service without a fair reason or a fair disciplinary or dismissal procedure. However, if an employee can establish an automatically unfair or discriminatory reason for their dismissal, there is no qualifying service period.

Short service dismissal is the termination of an employee's contract with less than two years of service. Employers can legally dismiss an employee who has not accrued statutory protection against unfair dismissal, without having to defend the reasonableness or procedural fairness of this decision.

Yes, an employee can be dismissed after 2 years of service. However, the employer must demonstrate that there was a fair reason for the dismissal, such as a capability or conduct issue. Additionally, the employer must show that they acted reasonably in all circumstances when making the decision to dismiss and followed a fair procedure. It is important to note that employees can only claim unfair dismissal if they have worked for their employer for at least 2 years, unless they are claiming for an automatically unfair reason.

What constitutes automatically unfair dismissal regardless of service length?

Dismissal is automatically unfair if it is due to reasons such as pregnancy, whistleblowing, trade union membership, or exercising employment rights. It is also automatically unfair if the dismissal is discriminatory, for example, based on race, age, or disability.

How might compensation for dismissal be calculated for employees with less than two years of service?

If you are dismissed unfairly with less than two years of service, you may be entitled to a basic award and a compensatory award. The basic award is calculated based on your age, length of service, and weekly pay. The compensatory award is calculated based on your financial losses, including loss of earnings, benefits, and pension contributions.

What are the exceptions where dismissal terms do not require a minimum of two years' service?

Dismissal terms do not require a minimum of two years' service if it is due to gross misconduct, breach of contract, or incapacity. In these cases, the employer has the right to terminate the employment without notice.

What guidance does ACAS offer regarding dismissal for employees with short service?

ACAS offers guidance on how to dismiss employees fairly, including those with short service. The guidance includes following a fair procedure, having a valid reason for dismissal, and considering alternatives to dismissal.

How can I write a redundancy letter if I have been employed for less than two years?

If you have been employed for less than two years and are being made redundant, your employer must still follow a fair redundancy process. This includes consulting with you about the redundancy, considering alternative employment, and providing a notice period.

Are there specific employment rights that protect employees during their first two years of service?

Employees who have been employed for less than two years still have some employment rights, including the right to be paid the national minimum wage, the right to a safe working environment, and the right not to be discriminated against. However, they do not have the right to claim unfair dismissal unless the dismissal is automatically unfair or discriminatory.