Unfair dismissal under two years can be a tricky topic. In the UK, employers have greater flexibility in dismissing employees with less than two years of service. However, certain legal protections still apply, and wrongful dismissal claims can arise if an employee is not given the proper notice or pay.
Many employees assume that they have no rights before reaching two years of service, but this isn’t entirely true. In some cases such as discrimination, whistleblowing, or contract breaches dismissal can still be challenged.
This guide explains UK employment law, employer obligations, and what employees can do if they believe they’ve been unfairly dismissed.
What Is Unfair Dismissal Under 2 Years?
Unfair dismissal occurs when an employer terminates an employee unfairly, without a valid reason, or fails to follow a fair process. Normally, employees need two years of continuous service to bring a standard unfair dismissal claim.
However, some exceptions apply, where dismissal is considered automatically unfair, regardless of service length. These include:
- Discrimination based on age, gender, race, disability, or other protected characteristics.
- Whistleblowing: reporting wrongdoing or illegal activities.
- Maternity and paternity rights: Dismissal related to pregnancy or parental leave.
- Asserting legal rights, such as requesting the minimum wage or refusing to work in unsafe conditions.
| Unfair Dismissal | Wrongful Dismissal |
| Based on employment law | Based on breach of contract |
| Usually requires 2 years’ service | No service requirement |
| Can be automatically unfair | Focuses on notice periods and pay |
What Does the Law Say About Dismissing an Employee With Less Than 2 Years’ Service?
Under the Employment Rights Act 1996, employees are protected from unfair dismissal, but only after two years of service. This means that an employer doesn’t need a strong reason or a formal process to dismiss someone within their first two years.
However, employers must still follow the law, especially in cases covered by the Equality Act 2010. Employees are protected from day one against discrimination, whistleblowing retaliation, and other automatically unfair dismissals.
Even though no justification is required for most dismissals under two years, if the process is handled poorly, an employee could claim wrongful dismissal for breach of contract.
Once an employee reaches two years of service, employers must have one of the five fair reasons for dismissal, as outlined in the Employment Rights Act 1996:
- Capability: The employee is unable to perform their job.
- Conduct: The employee has engaged in misconduct.
- Redundancy: The job role is no longer required.
- Legal breach: Employing them would break the law (e.g., losing a necessary licence).
- Some other substantial reason (SOSR): A valid reason not covered above.
Dismissal must also be reasonable and proportionate, following a fair procedure.
How Does the Two-Year Rule Affect Unfair Dismissal Claims?
In the UK, unfair dismissal protection is primarily granted to employees who have worked continuously for their employer for two years or more. This means that employees who are dismissed before reaching the two-year milestone usually cannot bring an unfair dismissal claim against their employer.
Why Does the Two-Year Rule Exist?
The two-year rule was introduced to provide employers with greater flexibility in managing their workforce without the fear of frequent legal challenges.
It allows businesses to dismiss underperforming employees or restructure their workforce without having to justify the decision in most cases. However, this rule does not mean employers have complete freedom to dismiss employees without any consequences.
Exceptions to the Two-Year Rule
While most unfair dismissal claims require two years of service, there are several key exceptions where employees can still make a claim, regardless of their length of service:
Automatically Unfair Dismissal
Certain dismissals are considered automatically unfair, meaning that an employee does not need two years of service to bring a claim. These include dismissals due to:
- Pregnancy and maternity leave
- Whistleblowing (reporting illegal or unethical activities)
- Health and safety concerns (raising workplace safety issues)
- Trade union membership or activities
- Requesting statutory rights (e.g., national minimum wage, working hours)
- Refusing to work in dangerous conditions
In these cases, employers cannot defend their decision by claiming the employee did not have two years of service if the dismissal is linked to these reasons, the employee has the right to claim.
Unlawful Discrimination
Under the Equality Act 2010, employees are protected from day one against dismissal based on:
- Race
- Age
- Gender
- Disability
- Sexual orientation
- Religion or belief
- Marital or civil partnership status
If an employee is dismissed and they suspect that discrimination played a role, they can file a discrimination claim, which does not require two years of service.
What Happens If an Employee Reaches Two Years of Service?
Once an employee has completed two years of continuous employment, the employer must:
- Have a fair reason for dismissal (capability, conduct, redundancy, etc.).
- Follow a fair and reasonable dismissal process.
- Provide sufficient notice unless it’s gross misconduct.
If an employer dismisses an employee just before their two-year anniversary, it may be seen as a way to avoid unfair dismissal protections. In such cases, tribunals may investigate whether the timing of the dismissal was deliberate.
What Are Employers’ Responsibilities in the Dismissal Process?
Even though the two-year rule gives employers more flexibility in dismissing employees, they still have legal responsibilities when terminating an employment contract.
Failing to follow proper procedures can result in wrongful dismissal claims, breach of contract disputes, and damage to reputation.
Providing Proper Notice or Pay Instead of Notice
Employees who have worked for at least one month but less than two years are entitled to at least one week’s statutory notice unless they are dismissed for gross misconduct.
- If the employee’s contract states a longer notice period, the employer must honour it.
- Employers can pay in lieu of notice (PILON) if they want the employee to leave immediately.
If an employer dismisses someone without providing notice or PILON, they could face a wrongful dismissal claim.
Following a Fair Process
Even though an unfair dismissal claim may not be possible under two years, it is still best practice for employers to:
- Conduct a formal meeting with the employee.
- Provide a valid reason for the dismissal.
- Allow the employee to respond before making a final decision.
- Offer the right to appeal the dismissal.
Employers who skip these steps risk damaging morale, harming company reputation, and potentially facing claims for breach of contract.
Avoiding Automatically Unfair Dismissal
- Employers must be especially cautious when dismissing an employee within two years, ensuring that their reason for termination cannot be linked to protected rights, such as discrimination or whistleblowing.
Handling Redundancies Properly
If an employer makes a role redundant, they should:
- Prove that the role is genuinely redundant.
- Consider alternative roles within the company.
- Pay redundancy compensation (if applicable).
A poorly handled redundancy could still result in discrimination or wrongful dismissal claims.
What Should Employees Do After Being Unfairly Dismissed?
If an employee suspects that their dismissal was unfair, they should first determine whether they qualify for a legal claim.
Since most unfair dismissal claims require at least two years of service, employees must assess whether their situation falls under automatically unfair dismissal, wrongful dismissal, or discrimination.
Seeking legal advice or consulting ACAS can help clarify their options. Once they identify the type of claim they can make, the next step is to gather evidence. This includes employment contracts, written communication regarding their dismissal, and witness statements if applicable.
Keeping detailed records can strengthen their case if they decide to proceed with legal action. Employees should also explore their employer’s internal appeal process. Some employers have structured grievance procedures that allow dismissed employees to challenge their termination.
If this option is available, it is advisable to follow the correct procedures and present a well-documented case for reconsideration. If the issue is not resolved internally, employees may consider taking their claim to an employment tribunal.
For cases involving automatically unfair dismissal or discrimination, the claim must be filed within three months of the termination date.
Employment tribunals require solid evidence, so employees should ensure they have sufficient documentation to support their claim.Reaching out to legal professionals, trade unions, or employment rights organisations can provide further guidance.
These experts can assess whether a claim is likely to succeed and help employees navigate the legal process. If compensation is awarded, it may include financial reimbursement for lost earnings, damages for emotional distress, or even reinstatement in some cases.
What Are the Pitfalls of Dismissing an Employee Before Two Years?
Dismissing an employee before they reach two years of service may seem legally straightforward, but employers must be aware of the potential pitfalls. The most significant risk is automatically unfair dismissal, where certain dismissals are unlawful regardless of how long the employee has worked.
If an employer fires someone for whistleblowing, reporting health and safety concerns, or asserting statutory rights, they could face legal consequences even if the employee has been with the company for only a short time.
Another major concern is unlawful discrimination. The Equality Act 2010 protects employees from being dismissed based on protected characteristics such as age, gender, disability, race, or religion.
Unlike ordinary unfair dismissal claims, discrimination cases do not require two years of service. If an employee can demonstrate that discrimination played a role in their dismissal, they could bring a claim for compensation, which is uncapped and could result in significant financial penalties for the employer.
Wrongful dismissal is another risk employers must consider. If an employer breaches the terms of an employment contract by failing to provide the required notice period or not paying notice pay, the employee can claim wrongful dismissal.
Even if the employer does not need to justify the dismissal itself, failing to follow contractual obligations could lead to a legal claim.
Beyond legal risks, dismissing employees carelessly can harm a company’s reputation. If a business develops a reputation for frequently dismissing staff without due process, it may struggle to attract and retain talent.
Negative reviews on employer rating websites or word-of-mouth criticism from former employees can make recruitment more difficult. Remaining employees may also feel insecure about their job stability, leading to reduced morale and productivity.
Employers must also be cautious when dismissing employees close to their two-year anniversary. If an employer terminates someone’s contract just before they reach two years of service, the tribunal may investigate whether the dismissal was an attempt to avoid unfair dismissal protections.
If an employee can prove that their dismissal was strategically timed, they might have grounds for legal action.Finally, failing to follow proper dismissal procedures can create unnecessary disputes.
Even when an employer is not legally required to provide a reason for dismissal, conducting a formal meeting, offering the right to appeal, and ensuring clear communication can prevent misunderstandings and reduce the likelihood of legal claims.
By handling dismissals professionally and fairly, employers can protect their business from unnecessary legal challenges and maintain a positive workplace environment.
Conclusion
Unfair dismissal under two years is a complex issue. While employers have greater flexibility within this period, they must still follow legal requirements regarding discrimination, whistleblowing, and contractual obligations.
Employees who believe they have been unfairly dismissed should seek legal advice and consider taking their case to an employment tribunal if they qualify.
FAQs
Can I claim unfair dismissal if I’ve worked for less than two years?
Yes, but only in cases of automatically unfair dismissal, such as discrimination or whistleblowing.
What is the difference between unfair and wrongful dismissal?
Unfair dismissal relates to employment law protections and the Wrongful dismissal is about breach of contract, such as failing to provide notice pay.
How do I prove my dismissal was unfair?
Gather emails, contracts, witness statements, and performance records to support your claim.
Does my employer need a reason to fire me within two years?
No, unless the dismissal is automatically unfair (e.g., discrimination, whistleblowing).
What are my options if I believe I was unfairly dismissed?
You can file a claim with ACAS or take your case to an employment tribunal.
