“I have an employee who has been with me for under 2 years. Can I just dismiss them?”


The short answer is yes, but there are several important caveats which this article will outline.

Full employment law protections

An employee does not benefit from full employment law protection until they have been employed for a period of 2 years or more. If an employee has less than the 2 years continuous service needed to qualify for the right to not to be unfairly dismissed (to include one week’s notice), then an employer can dismiss the employee without the fear that the employee can pursue a claim for ordinary unfair dismissal against them. Even if the employer does not have a “potentially fair” reason for the dismissal.

However, there are a number of important pitfalls to avoid so that employees do not make successful claims for automatically unfair dismissal and wrongful dismissal (i.e breach of employment contract).

Automatically Unfair Dismissals

There are several reasons for dismissal which are deemed to be automatically unfair, regardless of the reasonableness of the employer’s decision to dismiss. The majority of cases of automatically unfair dismissal do not require an employee to have a certain length of continuous employment in order to bring a claim for automatically unfair dismissal.

A non-exhaustive list of automatically unfair dismissal reasons are set out in the Employment Rights Act 1996, examples include dismissals relating to pregnancy, childbirth, statutory maternity leave, statutory paternity leave, and dismissals for health and safety reasons.

If you are found to have dismissed for an automatically unfair reason, an Employment Tribunal could order your business to reinstate or re-engage the employee and your business will likely also be ordered to pay both a basic and a compensatory award of damages to the dismissed employee.

So, what is the best way to lessen the risk of automatically unfair dismissals? The most risk averse approach is to follow the same fair dismissal procedure as you would

for an employee with over 2 years’ service. Especially where you as the employer identify a potential protected characteristic. This procedure should include the following steps:

· A thorough investigation;

· Formal meetings where the employee can choose to be accompanied by a union representative or colleague;

· Clear letters detailing the reasoning for any dismissal in full;

· Offering the employee the right of appeal against their dismissal (preferably with a senior employee not involved in the investigation at an earlier stage).

For maximum safety, following the ACAS Code of practice on disciplinary and grievance procedures is recommended, as well as abiding by your own internal policies.


Wrongful dismissal

It is absolutely integral to abide by the terms of an employee’s employment contract when dismissing (or generally!), even if they have less than two years’ service, to avoid a claim for breach of contract or wrongful dismissal.

One of the most commonly breached terms of an employee’s contract relates to notice pay or notice periods. An employee’s notice period may be determined by an express term in the employment contract or by statute (an employee with less than 2 years’ continuous service is entitled to no less than one week’s notice).If the notice period expressed in the contract is less than the period stipulated by statute, the statutory minimum notice period will be implied.

Alternatively, employment contracts can have a payment in lieu of notice (‘PILON’) clause which you may be able to make use of to pay out the employee’s notice period without them coming to work and effectively bringing their termination date forward.

Breach of contract can also occur by not following anything in the contract relating to the dismissal procedure, you need to follow your policies incorporated into the contract. If the contract does not mention the need to follow a dismissal procedure, you will have a measure of freedom to act. However, it is still good practice to follow your dismissal procedure as if the employee was a 2-year plus employee (as set out in the procedure outline above in the automatically unfair section).

Don’t forget, this advice is general in nature and will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance.


Motor Industry Legal Services

Motor Industry Legal Services (MILS Legal Ltd) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.