Short Service Dismissal And The ACAS Code: What Employers Should Know

If you’re managing a small team, you’ll occasionally face the tough call of letting someone go during their first couple of years.

Short service dismissals can feel simpler - but they still carry legal and practical risks if you get the process wrong. The ACAS Code of Practice, notice and pay rules, and discrimination protections all still matter.

In this guide, we’ll demystify “short service” dismissals, explain what ACAS expects, and walk you through a low-risk process you can actually follow. Our goal is to help you act quickly and lawfully, without creating unnecessary tribunal risk.

What Does Short Service Dismissal Mean Under UK Law?

“Short service” usually refers to employees with less than two years’ continuous service. This matters because the general right to claim ordinary unfair dismissal usually only kicks in at the two-year mark.

However, “less risk” doesn’t mean “no risk.” Even where an employee has under two years’ service, they can still bring certain claims (and some have no minimum service requirement at all).

Key Points To Know

• Ordinary unfair dismissal: In most cases, employees need two years’ service to claim ordinary unfair dismissal. If they’re under that threshold, your dismissal won’t usually be scrutinised for reasonableness in the same way.
• Automatic unfair dismissal: No minimum service is required for certain protected reasons (for example, whistleblowing, health and safety activities, asserting statutory rights, TUPE, and certain family-related leave). Dismissing for a protected reason is automatically unfair from day one.
• Discrimination: There’s no service requirement for discrimination claims (e.g. disability, pregnancy and maternity, sex, race, age, religion or belief, sexual orientation, gender reassignment). A discriminatory dismissal can lead to costly tribunal awards.
• Wrongful dismissal: Regardless of length of service, you must honour contractual and statutory notice (or lawful pay in lieu). Failing to do so can result in a wrongful dismissal claim for notice pay and related losses.

So, while you generally have more flexibility with under-two-year employees, you still need a clear, lawful reason and a fair process - at least to the level that protects your business from the most common risks.

It’s also worth double-checking employment status. If you’re dealing with a “worker” or a genuinely self-employed contractor, different rights apply. If in doubt, review status first so you’re not applying the wrong rules - our explainer on worker vs employee is a helpful refresher.

Do You Have To Follow The ACAS Code For Short Service Dismissals?

The ACAS Code of Practice on Disciplinary and Grievance Procedures isn’t law, but tribunals use it as a yardstick for fairness. If an employee does bring a claim, compensation can be adjusted by up to 25% for unreasonable failure to follow the Code.

In short service situations, you’re not legally obliged to run a lengthy process, but it’s still sensible to follow the core principles of the Code in a proportionate way. That means:

• Informing the employee of the issue and the potential outcome
• Giving them a chance to respond (a meeting and written opportunity)
• Allowing a companion at any formal meeting (if it’s disciplinary in nature)
• Considering the facts and evidence before deciding
• Confirming the decision in writing, with brief reasons
• Offering an appeal, especially where there are conduct or capability allegations

Following these steps isn’t just about “ticking boxes.” It helps you avoid allegations that the dismissal was for a prohibited reason (e.g. a grievance they raised, a health condition, pregnancy, or whistleblowing). A short, calm, documented process goes a long way.

If performance is the concern, you might first try a proportionate plan with targets and check-ins. A simple, time-bound approach - similar to a light-touch performance improvement plan - often resolves issues without moving to dismissal, and shows you acted fairly.

Lawful Reasons Vs High-Risk Reasons (Even Under Two Years)

Before you start any process, be crystal clear about your reason. You don’t need to prove a “fair reason” to the unfair dismissal standard if the employee has under two years’ service - but your reason must still be lawful and non-discriminatory.

Lower-Risk Reasons (If True And Well-Documented)

• Capability or performance concerns (e.g. not meeting expectations after support)
• Conduct concerns (e.g. lateness, repeated minor issues, or more serious misconduct)
• Probation not passed (with evidence of feedback and checkpoints)
• Redundancy where there is a genuine reduction in work or restructure (even for short service employees, consult and follow a fair process proportionate to the numbers affected)
• Some other substantial reason (e.g. breakdown in trust/working relationship), if you can evidence it

High-Risk Reasons (Avoid - Day-One Rights Apply)

• Pregnancy or maternity-related reasons (including sickness related to pregnancy)
• Disability-related absence or performance issues without reasonable adjustments
• Whistleblowing (making a protected disclosure)
• Health and safety activities and refusals in dangerous situations
• Trade union membership or activities
• TUPE transfer-related reasons
• Discrimination based on protected characteristics (e.g. age, race, religion or belief, sex, sexual orientation, gender reassignment)

If there’s any hint of these protected reasons, get advice before you act. A quick check now is far cheaper than defending an automatic unfair dismissal or discrimination claim later.

Where conduct concerns are serious, you may be considering a dismissal for gross misconduct. Even with short service, investigate promptly, explain the allegations, allow a companion, and give the employee an opportunity to respond before deciding on gross misconduct dismissal without notice.

A Fair, Low-Risk Process: Step-By-Step

Here’s a proportionate process that aligns with ACAS principles while recognising the realities of small teams and short service.

1) Check Status, Contracts And Probation

• Confirm whether you’re dealing with an employee, worker or contractor (apply the reality of the relationship).
• Review the Employment Contract for notice provisions, probation details, and any contractual disciplinary procedure you’ve promised to follow.
• Look at your probation period end date and any extension clause. If probation is ongoing, a shorter, supportive process may be enough; be sure to confirm in writing if you’re extending.

2) Gather Facts Quickly (And Neutrally)

• Document the concerns with dates, examples, and any prior feedback or training.
• If it’s a conduct issue, carry out a brief investigation: speak to relevant witnesses, capture evidence, and keep notes.
• Consider whether any health condition or protected characteristic is relevant and whether reasonable adjustments might help (for capability cases).

3) Invite To A Meeting (Explain The Concerns)

• Send a short letter explaining the concerns and that dismissal is a possible outcome. Attach any evidence you’ll rely on.
• Explain their right to be accompanied if it’s a disciplinary meeting.
• Give reasonable notice of the meeting so they can prepare (usually 24–48 hours in short-service, low-complexity cases).

4) Hold The Meeting And Listen

• Present the concerns factually, ask open questions, and hear their explanation.
• Consider alternatives to dismissal (e.g. adjusted duties, training, short performance plan, or a final warning if appropriate).
• Adjourn briefly to reflect before deciding.

5) Decide, Confirm In Writing, Offer An Appeal

• Confirm the outcome in writing with brief reasons and the effective date.
• Set out notice arrangements (worked, garden leave or payment in lieu) and any final pay details.
• Offer an appeal route and timescale. Even for short service, this evidences fairness and can correct mistakes early.

Where issues are serious and ongoing, you may need to suspend while you investigate. Follow a measured approach - our guide to employee suspension covers the key steps and risks.

Finally, stay consistent with your own procedures. If your Staff Handbook promises a process, stick to it or make sure the handbook is non-contractual and allows discretion. Departing without good reason can turn a simple exit into a dispute about breach of employment contract.

Notice, Pay, Holidays And Paperwork At Exit

Even with short service, you must meet your notice and pay obligations. Getting the sums right is one of the quickest ways to avoid post-exit disputes.

Notice Period

• Statutory minimum: After one month’s service, employees are entitled to at least one week’s statutory notice. This increases to one week per full year of service (up to 12 weeks). Under two years, it’s typically one week.
• Contractual notice: If the contract promises more than the statutory minimum, the longer period applies. You can usually place the employee on garden leave if the contract allows.
• Pay in lieu (PILON): You can pay in lieu of notice if the contract allows, or by agreement. Be clear about the termination date and payment calculation.

Holiday Pay

• Accrued but untaken statutory holiday must be paid on termination. Pro-rate up to the termination date.
• If the employee took more holiday than accrued, you can deduct the excess if the contract allows and the deduction is lawful.

Deductions And Final Pay

• Only make deductions that are permitted by law, the contract, or a prior written agreement. Unauthorised deductions can lead to claims - see our guide on wage deductions for the boundaries.
• Include any outstanding expenses, commission that’s become due, overtime, or adjustments set out in the contract.

Paperwork And Systems

• Confirm the decision in writing, including notice arrangements, holiday pay and any property return.
• Issue the P45 and process payroll in the next RTI submission.
• Retrieve company property, revoke access rights, and remind the individual of any confidentiality, IP and post-termination obligations.

If the dismissal relates to hours, breaks or night work compliance, remember your ongoing duties under the Working Time Regulations. Non-compliance can undermine your position and invite separate complaints.

Key Takeaways

• Short service dismissals are simpler because ordinary unfair dismissal generally needs two years’ service - but day-one rights (discrimination, whistleblowing, health and safety, TUPE) still apply and carry significant risk.
• Follow the ACAS Code proportionately: tell the employee the issue, meet with them, allow a companion for disciplinary meetings, consider their response, confirm the decision in writing, and offer an appeal.
• Be clear about your reason. Capability, conduct, probation not passed and genuine redundancy can be lower-risk if they’re evidenced. Avoid any reason linked to protected characteristics or protected activities.
• Get the exit logistics right: statutory or contractual notice, pay in lieu where appropriate, holiday pay, lawful deductions and payroll/P45 processing.
• Consistency matters. Align your approach with the Employment Contract and your policies. If you’ve set expectations in your Staff Handbook, follow them or ensure they’re clearly non-contractual.
• Where issues are ongoing or serious, consider a short, supported performance plan or a careful misconduct process. For serious allegations, review your options around gross misconduct and proportionate suspension.
• If you’re unsure about protected reasons or the best path forward, get tailored advice. A quick sense-check can prevent an avoidable tribunal claim.

If you’d like support with a short service dismissal - from drafting letters to sense-checking risk - our team can help with practical, business-friendly advice. You can reach us on 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.