Dismissing employees with short service: what changes from January 2027

Employers often assume that an employee with less than two years’ service can be dismissed without giving a reason or following a formal procedure. Although employees with short service currently have more limited protection against ordinary unfair dismissal, terminating their employment is not without risk. 

An employee may still bring a claim if the dismissal is discriminatory, connected with whistleblowing or automatically unfair for another statutory reason. They may also have claims for wrongful dismissal, breach of contract, unpaid wages or outstanding holiday pay. 

Before dismissing an employee, you should identify the genuine reason for the decision, consider whether any protected rights are involved and check the employee’s contract. Following a reasonable process can help you identify legal issues before they develop into employment tribunal claims. 

The law will change on 1 January 2027. Until then, most employees need two years’ continuous service to bring an ordinary unfair dismissal claim. For dismissals taking effect from 1 January 2027, the qualifying period will reduce to six months. This means that anyone whose employment began after 1 July 2026 is now potentially eligible to claim unfair dismissal. 

Can you dismiss an employee with less than two years’ service?

Under the current law, an employee will generally need two years’ continuous employment before they can bring an ordinary unfair dismissal claim.

This usually gives employers greater flexibility when dismissing an employee who has not yet reached that threshold. In many cases, the employer will not need to establish one of the potentially fair reasons for dismissal or show that it followed the same procedure that would be expected when dismissing a longer serving employee.

Having less than two years’ service does not remove all employment rights. It should not be treated as permission to dismiss an employee arbitrarily or for an unlawful reason.

Before making a decision, you should establish why the employment relationship is ending. Common reasons include poor performance, misconduct, poor attendance, concerns about suitability, a breakdown in working relationships or a reduced business need for the role.

The reason should be supported by evidence and should remain consistent throughout the process. Giving a vague or misleading explanation can increase risk, particularly if the employee has recently raised a complaint, made a protected disclosure, or disclosed a health condition, or given any sort of indication that they might be pregnant.

You should also review the employment contract, the probation terms and any relevant workplace policies. Check what notice must be given and whether the employee has been promised a particular procedure. Checking the employment contract and the employee’s HR records generally is also a good way to ensure that their continuous service didn’t actually start more than two years ago. If your company acquired a business, or took over a contract, it’s worth double-checking the start date of their continuous service.

Even where continuous service is less than two years and there are no protected characteristics or whistleblowing, meaning that a full disciplinary or capability process is probably not needed, a proportionate process is usually advisable. This might involve investigating the issue, explaining the concerns to the employee, holding a meeting and considering their response before reaching a final decision.

Do employees with less than two years’ service have any legal protection against dismissal?

The two year qualifying period relates mainly to ordinary unfair dismissal. However, there are other statutory and contractual protections that may still result in claims against you.

From the beginning of employment, employees are protected against discrimination, harassment and victimisation under the Equality Act 2010. They are also protected against dismissal for whistleblowing, raising certain health and safety concerns, taking family leave or asserting a statutory employment right.

Contractual rights also apply regardless of length of service. Unless summary dismissal is justified, an employee will normally be entitled to notice or notice pay. They must also receive outstanding wages, accrued holiday pay and any other contractual sums due on termination. Depending on how their contract is drafted, they may also be entitled to be paid for benefits lost during their notice period, such as car allowance or medical cover, or even bonuses.

The consequences of getting the decision wrong can be significant. Compensation for discrimination and whistleblowing claims is unlimited. A claim can also consume management time, generate legal costs and affect the reputation and morale of the business.

Can an employee with less than two years’ service bring an unfair dismissal claim?

In most cases, an employee whose dismissal takes effect at least seven days before 1 January 2027 must have two years’ continuous service before they can bring an ordinary unfair dismissal claim. However, an employee does not need two years’ service where the reason for dismissal is automatically unfair.

Employers should calculate continuous service carefully. In some circumstances, the statutory minimum notice period may be added when determining the effective date of termination. This can be important where an employee is dismissed shortly before reaching two years’ service.

For example, dismissing an employee without notice shortly before their second anniversary may not prevent them from acquiring the necessary qualifying service. Legal advice should be taken where the employee is approaching the threshold.

You should also check whether the individual has the legal status of an employee. Ordinary unfair dismissal protection usually applies to employees rather than the wider category of workers. Employment status depends on the reality of the working relationship, not simply the description used in the contract.

What are the exceptions to the two year qualifying period?

The main exceptions arise where the reason for dismissal is automatically unfair or where the circumstances give rise to a separate claim that does not require a minimum period of service.

You should not rely on short service until you have reviewed the employee’s history and the events leading to the proposed dismissal. Consider whether the employee has recently raised a complaint, requested leave, reported wrongdoing or disclosed information about their health.

The timing of events can be particularly important. A dismissal that follows soon after a protected act may create an inference that the two are connected, even where the employer gives a different reason.

What reasons for dismissal are automatically unfair, regardless of length of service?

Certain reasons for dismissal are treated by law as automatically unfair. In many of these cases, no qualifying period is required.

Examples include dismissal because an employee made a protected disclosure, commonly known as whistleblowing, or raised qualifying health and safety concerns. Protection may also apply where the employee asserted a statutory right, undertook trade union activities or exercised rights relating to working time or the National Minimum Wage.

Dismissals connected with pregnancy and certain family rights can also be automatically unfair. This may include dismissal because the employee is pregnant, has taken maternity leave or has exercised other qualifying rights to family leave.

The full list is detailed and the precise requirements differ between rights. Employers should obtain advice where an employee has exercised or attempted to exercise a statutory right before the proposed dismissal.

You should examine the real reason for the decision rather than relying only on the reason recorded by the person formally making it. If the employee’s manager was influenced by a protected disclosure or statutory complaint, the business may face a claim even if the dismissal letter refers to performance or suitability.

What process should employers follow when dismissing an employee with less than two years’ service?

There is no single procedure that must be followed in every case. The appropriate steps will depend on the reason for dismissal, the employee’s contract, the wording of the employer’s policies and the level of legal risk.

A full procedure involving several formal warnings may not be necessary. Dismissing without any investigation or conversation can prevent the employer from identifying important facts.

As a minimum, you should usually investigate the concerns, tell the employee what the issue is, give them an opportunity to respond and consider their explanation before reaching a decision.

The process should be genuine. A meeting held after the final decision has already been made is unlikely to provide meaningful protection.

Can you dismiss an employee during their probationary period?

A probationary period allows an employer to assess an employee’s performance, conduct, attendance and general suitability for the role. It does not, remove their statutory or contractual rights.

Before dismissing, check when the probation period ends and whether it has been validly extended. You should also review the notice provisions and any procedure promised in the contract or probation policy.

The employee should normally be told about concerns during the probation period rather than learning about them for the first time at the final review. Managers should set clear objectives, provide appropriate support and record discussions about progress.

At the review meeting, explain the concerns and give the employee an opportunity to respond. Consider whether the concerns result from inadequate training, unclear expectations or a medical condition. If further improvement is realistically possible, you may decide to extend probation rather than dismiss.

Where an employee will have at least six months’ service when dismissed on or after 1 January 2027, the new unfair dismissal qualifying period will need to be considered.

Do employers need to follow a disciplinary or capability process before dismissal?

A short serving employee will not usually be able to bring an ordinary unfair dismissal claim under the current law. This means the employer may be able to use a shorter procedure than it would for a longer serving employee.

The employee’s contract may require a specific process. A policy may also become contractually binding depending on its wording and how it has been communicated.

Following a reasonable procedure also helps to test the evidence. An apparently straightforward performance concern may turn out to be linked to disability, pregnancy, whistleblowing or a lack of training.

Where misconduct is alleged, the employer should carry out an investigation proportionate to the seriousness of the allegation. The employee should understand the case against them and have a fair opportunity to explain what happened.

For capability concerns, the employer should consider whether the employee knew what standard was required and whether they were given suitable support. It may be appropriate to set a short review period, although this will depend on the seriousness of the concern and the employee’s role.

An appeal is not always essential in a short service case, but offering one can help correct factual errors and demonstrate that the employer acted reasonably.

What evidence should employers keep before dismissing an employee?

Keep evidence of the concerns that led to the dismissal, including relevant correspondence, performance information, attendance records and notes of meetings. Record the employee’s explanation and the alternatives that were considered.

The person making the decision should document the genuine reason for dismissal and why that decision was considered appropriate. Where similar cases have been handled differently, the employer should be able to explain the distinction.

Internal communications should remain factual and professional. Informal messages between managers may have to be disclosed during legal proceedings or provided in response to a data subject access request.

Only collect and retain information that is relevant. Records should be handled in accordance with data protection obligations and the organisation’s retention policy.

What should employers include in a dismissal letter?

The letter should confirm that the employee’s employment is ending and explain the genuine reason for the decision. It should state the termination date and set out the notice arrangements clearly.

Explain whether the employee will work their notice, remain on garden leave or receive a payment in lieu. The letter should also address outstanding salary, holiday pay, benefits, commission and expenses where relevant.

Include practical information about returning property, access to business systems and any continuing confidentiality obligations or post termination restrictions.

Where an appeal is offered, state the deadline and the person to whom the appeal should be submitted.

Avoid using generic wording that does not reflect the real reason for dismissal. An inaccurate letter may damage the employer’s credibility if a claim is later brought.

What are the risks of getting unfair dismissal wrong?

A dismissal involving an employee with less than two years’ service can lead to discrimination, whistleblowing, wrongful dismissal or automatically unfair dismissal claims. It can also result in wage disputes, grievances and requests for personal data.

The employee may have only a limited period in which to begin an employment tribunal claim. Employers should respond promptly to Acas early conciliation correspondence and preserve all relevant documents.

A poorly handled dismissal can also affect the wider workforce. Employees may lose trust in management if a colleague appears to have been dismissed suddenly or without a reasonable explanation.

Inconsistent reasons are particularly damaging. If the explanation changes between internal messages, the dismissal meeting and the written letter, a tribunal may conclude that the stated reason was not genuine.

How can employers reduce the risk of tribunal claims when dismissing an employee with less than two years’ service?

Begin by identifying the real reason for dismissal and gathering the evidence that supports it. Check whether the employee has recently raised concerns about discrimination, pay, working conditions, health and safety or wrongdoing.

Consider whether disability, pregnancy, family leave or another protected characteristic is relevant. Where appropriate, obtain medical information and consider reasonable adjustments.

Review the employment contract, probation terms and workplace policies. Confirm the notice entitlement and identify any procedure the employer has promised to follow.

The employee should be told about the concern and allowed to respond. Keep clear records of the process, the evidence considered and the reason for the final decision.

Calculate termination payments carefully and communicate the outcome professionally. Seek legal advice before taking action where the employee has raised a protected issue or where the reason for dismissal is sensitive or unclear.

It is sensible to refer to the ACAS Code of Practice on Disciplinary and Grievance Procedures, which offers helpful guidance and which a tribunal will take into account if the dismissal is challenged. Keep an eye out for a revised Code, which is currently in draft but will, if approved, recommend that employers set out in a dismissal letter the steps that were previously taken in order to avoid dismissal, such as training or previous warnings.

How will unfair dismissal protection change from 1 January 2027

The Employment Rights Act 2025 will make significant changes to unfair dismissal protection.

For dismissals with an effective termination date of at least seven days before 1 January 2027, most employees will still need two years’ continuous service to bring an ordinary unfair dismissal claim. For dismissals taking effect from 1 January 2027, that qualifying period will reduce to six months. The existing statutory cap on the compensatory award for unfair dismissal will also be removed.

Earlier proposals referred to unfair dismissal becoming a right from the first day of employment, together with a special initial employment period. That is not the final position. The enacted reform provides for a six month qualifying period.

Employers should review probation periods, disciplinary procedures, capability processes and manager training before the change takes effect. Six month probation periods may leave little time to assess performance, communicate concerns and complete a reasonable dismissal process before ordinary unfair dismissal protection applies.

Businesses should set expectations at the start of employment, hold regular probation reviews and address concerns as they arise. Waiting until the final week of probation may make it difficult to reach a properly informed decision before the employee gains qualifying service.

The new rules will not replace the existing protections against discrimination and automatically unfair dismissal, which can already apply without two years’ service.

Summary

Dismissing an employee with less than two years’ service may appear straightforward, but legal risks can arise from the beginning of employment.

Our employment solicitors can help you assess a proposed dismissal, identify discrimination or whistleblowing risks and choose an appropriate process. We can also review your probation, disciplinary and capability procedures in preparation for the reduction of the unfair dismissal qualifying period on 1 January 2027.