Short Service Dismissals: Why They Are Rarely ‘Low-Risk’ to Employers

Decisions involving short service employees are often treated as relatively low risk due to employees with less than two years’ service (currently) being unable to claim ordinary unfair dismissal.

As a result, they tend to be dealt with more quickly, via abbreviated procedures, and sometimes with less planning or analysis than may be applied to longer-serving colleagues.

However, in practice, they can become some of the more complex and time‑consuming issues we see employers dealing with.

So why are these situations so often underestimated, where do employers become unstuck, and what steps can businesses take to reduce risk around short service dismissal claims – both now and in the future?

What is a short service dismissal?

A short-service dismissal refers to terminating the employment of an employee with less than two years’ continuous service.

As the law currently stands, these employees cannot bring claims for ordinary unfair dismissal. However, they still have protection against:

• Discrimination
• Automatic unfair dismissal

Why are short service dismissals still risky for employers?

On the face of it, the position seems straightforward: if an employee doesn’t have enough service to bring an ordinary unfair dismissal claim, the perceived level of legal risk is lower.  

In reality, the issue doesn’t always end there.

What we commonly see is a shift in how concerns are framed and the introduction of new allegations, when a short-serving employee is dismissed. That shift can happen at different stages – either during the dismissal process itself, or in response to the dismissal having already taken place.

Employees who cannot pursue claims for ordinary unfair dismissal will often look to bolster their bargaining position or apply pressure on employers – by asserting:

• Discrimination claims (e.g. disability, sex, age, race)
• Automatic unfair dismissalclaims, e.g. linked to:
  • Health and safety concerns
  • Family-related leave
  • Asserting statutory rights
  • Whistleblowing (protected disclosures)

These types of allegations significantly broaden the scope of the issues and associated risks to the business.  The result is that what may have started as a relatively contained employment decision can quickly evolve into something much more complex – both legally and practically.

How short service dismissal claims are evolving 

We are seeing a number of consistent trends in how disputes are being handled in practice by short-serving employees and their representatives:

1. More strategic claims

Allegations are often framed in a way that enables a claim to be brought, rather than reflecting how the issue was originally understood internally.

2. Greater use of DSARs

Data subject access requests are frequently used to obtain information, apply pressure or delay matters, particularly where there is an underlying dispute.

3. More complex disability arguments

We are seeing an increase in allegations relating to disability – including complex mental health and neurodivergent conditions – sometimes without any formal diagnosis and often raised at a late stage. These require a far more detailed and sensitive investigation than employers initially anticipate.

4. Increasing use of AI

Employees are also making use of AI tools to help structure complaints and potential claims. While this can result in more detailed allegations, it does not always mean those claims are well-founded, or even understood by the employees themselves – but it does tend to increase the time and resource required to respond.

Why this creates real business risk

The impact of these situations isn’t limited to legal exposure. In many cases, the bigger challenge for employers is:

• Significant time spent by managers dealing with the issue
• An increased level of internal resource required
• Ongoing disruption to teams
• Pressure to reach a commercial resolution, even where the underlying position may be defensible

 In the employment tribunal:

• Each party typically bears its own legal costs regardless of outcome
• Even a successful defence can be expensive

So, even where an employer has a strong defence in principle, the reality is that defending an employment tribunal claim can involve significant cost and resource. Legal fees alone can quickly escalate depending on the complexity of the issues, particularly where discrimination or whistleblowing arguments are in play and multiple-day hearings are required. 

Alongside that, there is the internal cost. Preparing for a tribunal claim typically involves a significant investment of management and HR time – gathering documents, preparing witness evidence, attending hearings and managing the process over several months.

When those factors are weighed together, it is not uncommon for the cost of defending a claim to exceed the cost of settling it at an early stage.

The impact of the Employment Rights Act 2025 on short service dismissal risk

The Employment Rights Act 2025 is expected to reduce the qualifying period for unfair dismissal to six months (anticipated January 2027).  The cap on compensation in unfair dismissal claims (currently, the lower of £123,543 or 52 weeks’ gross pay) will also be abolished.

This is likely to further evolve the dynamics of short service claims, through:

• A reduction in the number of situations falling into the traditional “short service” category
• The window narrowing for dismissing new starters without ordinary unfair dismissal risk

However, that does not remove the issue entirely:

• Employers will still dismiss some employees within the first six months (i.e. before they gain protection from unfair dismissal), particularly where a new starter is underperforming, or isn’t the right fit for their business
• Discrimination and automatic unfair dismissal claims will remain available from day one
• These claims can be brought regardless of length of service

There is some speculation that, once the qualifying period reduces and the cap on unfair dismissal compensation is removed, we may see fewer employees relying on discrimination or automatic unfair dismissal arguments to bring claims or increase their value.  However, there are good reasons to be cautious about this theory.

As noted above, we are already seeing an increase in more complex and strategically framed allegations, driven by greater access to information and the use of AI-assisted drafting. Employees are increasingly able to present claims in a more sophisticated way, often combining multiple causes of action to maximise pressure on the employer.

Against that backdrop, it is unlikely that discrimination and automatically unfair dismissal claims will fall away simply because ordinary unfair dismissal claims become easier to pursue.  These claims offer tactical advantages that go beyond access to the tribunal process, including:

• A broader scope of disclosure
• The ability to scrutinise wider aspects of the employment relationship
• Increased leverage in settlement negotiations

Adding allegations of discrimination or whistleblowing can materially increase settlement value and shift the dynamics of a dispute. It can also widen the factual matrix of a case, introduce elements of reputational risk, and require employers to justify decisions in greater detail and over a longer timeframe.

For these reasons, it is more likely that we will continue to see these arguments used alongside ordinary unfair dismissal claims, rather than being replaced by them. From an employer perspective, this means the focus should be on ensuring that decision-making processes and documentation can withstand the more expansive and forensic scrutiny that often accompanies such claims.

Practical considerations for employers

There is no single solution – but there are some common themes that are worth keeping in mind:

• Avoid assuming that short service equates to low risk
• Take time to properly sense-check the rationale for decisions
• Ensure that the evidence and thinking behind decisions is documented, not just the outcome
• Be alert to issues that may change the legal framing of a situation

Employers should also bear in mind how quickly unfair dismissal protection may now arise. As the qualifying period for ordinary unfair dismissal claims is set to reduce to 6 months, anyone recruited before July 2026 will gain protection from unfair dismissal by January 2027, when the qualifying period reduces to six months.

In practice, that leaves a relatively short window in which decisions about a new starter’s suitability need to be made. It also creates a potential trap where concerns are allowed to drift – for example, where performance or conduct issues are identified early on but not addressed decisively, only for the employee to move into the protection threshold before action is taken.

Final thought

The key point is this:

Risk is not just about whether a claim can be brought – it is about how easily a situation can escalate once it is.

 And in the current landscape, many of those situations start life as something employers initially view as straightforward.

Further support

AfterAthena’s employment law service offers flexible retained options with legal expenses insurance to support businesses through the complexities of short service dismissals and beyond, and protect from high legal costs should a tribunal be brought.

Get in touch today to speak with an expert.

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