How do I legally dismiss an employee in a UK startup?
By SuLe · Updated 2 July 2026
To dismiss an employee lawfully you need a fair reason — conduct, capability, redundancy, illegality or some other substantial reason — and a fair process following the Acas Code, plus proper notice. Even where an employee has under two years' service, day-one claims such as discrimination and whistleblowing apply and are uncapped, so process still matters.
Key facts
- A fair dismissal needs both a fair reason and a fair process (the Acas Code) — tribunals can uplift awards by up to 25% for ignoring the Code.
- Ordinary unfair dismissal currently requires two years' service (as of mid-2026), but the Employment Rights Act 2025 is expected to remove this — commencement expected 2027, check current status.
- Day-one claims — discrimination, whistleblowing, health-and-safety and asserting a statutory right — have no service requirement and compensation is uncapped.
- Acas early conciliation is mandatory before a tribunal claim; the basic time limit is three months less one day from the dismissal.
- You must give at least the statutory minimum notice: one week after a month's service, rising with length of service.
What makes a dismissal fair?
A fair dismissal has two ingredients: a fair reason and a fair process. Miss either and an employee with qualifying service can claim unfair dismissal.
The law recognises five potentially fair reasons: conduct, capability or performance, redundancy, illegality, and "some other substantial reason". You must genuinely rely on one of these, not reach for it after the fact.
Process is the part startups most often skip. For conduct and performance, that means investigating, putting concerns to the employee at a hearing where they can respond and be accompanied, deciding fairly, and offering an appeal. The Acas Code of Practice sets the standard, and tribunals can add up to 25% to an award where you unreasonably ignore it.
Does the two-year rule mean under-two-years hires have no rights?
No — and this is the most dangerous assumption founders make. It is true that ordinary unfair dismissal currently needs two years' service (as of mid-2026), which lowers the risk of a straightforward performance dismissal below that mark.
But "lower risk" is not "no risk". Day-one claims apply from the first day of employment: discrimination under the Equality Act 2010, whistleblowing, health-and-safety dismissals, and dismissal for asserting a statutory right. Compensation for discrimination and whistleblowing is uncapped.
This picture is also changing. The Employment Rights Act 2025 is expected to remove the qualifying period and introduce a statutory probation regime — commencement is expected around 2027, so check the current status before relying on the two-year rule.
What process should a startup actually follow?
Follow a proportionate version of the Acas Code even for shorter-service staff — it is your best protection against a day-one claim dressed up as something else. GOV.UK's dismissing-staff guidance walks through the core steps.
Document a genuine, non-discriminatory reason. Invite the employee to a meeting, let them respond, and consider what they say before deciding. Give the correct notice or pay in lieu, and offer an appeal. Keep contemporaneous notes throughout.
Where you want certainty — for example, to avoid any risk of a claim — a settlement agreement can be offered, under which the employee waives claims in return for a payment, having taken independent legal advice.
| Reason for dismissal | Process focus | Notes |
|---|---|---|
| Conduct | Investigation, hearing, appeal | Follow the Acas Code closely |
| Capability / performance | Warnings, support, review period | Give a genuine chance to improve |
| Redundancy | Fair selection, consultation | Role must genuinely disappear |
| Illegality | Confirm the legal bar (e.g. right to work) | Check before acting |
| Some other substantial reason | Document the business reason | Narrow and fact-specific |
Worked example
Elena runs a healthtech startup and needs to let go of a support lead, Jack, who has 14 months' service and persistent performance problems. Because Jack is under two years, ordinary unfair dismissal is unlikely — but Elena knows day-one claims still apply.
She documents specific performance concerns, holds a meeting where Jack can respond, considers his points, then confirms the decision in writing with his contractual one-month notice paid in full and an appeal offered. She keeps notes showing the reason was performance, not anything discriminatory or retaliatory. The clean paper trail is what protects the company if Jack later alleges an unlawful reason.
Where founders go wrong
Believing under-two-years staff have "no rights"
— discrimination and whistleblowing claims apply from day one and are uncapped.Skipping process because the reason feels obvious
— no fair process can turn a fair reason into an unfair dismissal.Firing in the heat of the moment
— a documented reason and a short, calm process protect you far better than speed.Forgetting Acas early conciliation and time limits
— claims run to a tight three-months-less-a-day deadline, and conciliation is mandatory first.
Related questions
Can I dismiss someone with under two years' service without process?
You currently avoid ordinary unfair dismissal below two years' service (as of mid-2026), but never assume "no rights". Discrimination, whistleblowing and other day-one claims apply from the first day and are uncapped, so still document a fair reason and give proper notice. [More: When do employees get unfair dismissal rights in the UK?]
What counts as a fair reason to dismiss?
The law recognises five: conduct, capability or performance, redundancy, illegality (such as losing the right to work), and "some other substantial reason". You need a genuine reason within one of these categories and a fair process to go with it.
Do I have to follow the Acas Code?
For conduct and performance dismissals, yes in substance. Tribunals can increase an award by up to 25% where an employer unreasonably ignores the Acas Code of Practice, so a fair investigation, hearing and appeal are worth the effort.
Is dismissal the same as making someone redundant?
Redundancy is one type of dismissal, used when a role genuinely disappears. It still needs a fair process — fair selection, consultation and consideration of alternatives — and may trigger statutory redundancy pay depending on the employee's length of service.
Dismissals are where employment law is least forgiving, and a rushed process can turn a justified decision into a costly claim — especially with day-one rights and reform on the horizon. A SuLe solicitor can guide you through a fair process or a clean settlement. Book a free consultation about your contracts before you act.
Keep reading: When do employees get unfair dismissal rights in the UK? · What is a settlement agreement? · How do probation periods work legally in the UK? · What notice period should startup employment contracts use? · Can I fire a co-founder who is also an employee?
Primary sources: GOV.UK — Dismissing staff · Acas — advice and codes of practice
