Why the two years’ service rule matters for employees

If you have less than two years’ continuous employment with your employer, your employer can dismiss you by giving you no more than statutory or contractual notice. However, there are some exceptions to this rule and if you have a claim such as discrimination or a health and safety at work issue, you do not require two years’ service to make an employment tribunal claim.

Have you worked for your employer for more than two years?

Before you start to think about whether or not you might have a legal employment claim, there is one fundamental issue that you need to know and it is this:

With some notable exceptions, if you have less than two years’ continuous employment with your employer, then they can dismiss you by giving you no more than statutory or contractual notice and there is nothing you can do about it. This is often referred to for short as ‘the two year rule’ which term we will use here.

An employee needs two years’ service in order to claim ordinary unfair dismissal, which is the most common claim leading to settlement agreements (but see below for exceptions).


Exceptions to the two-year rule:

There are some notable exceptions to the two-year rule and – since the onset of the coronavirus pandemic – these have become increasingly important for employee rights. They include the following:


‘Discrimination’ in the context of the covid-19 crises mainly involves the rights of employees who are pregnant, or the elderly and/or those with disabilities and other health conditions.

These groups of employees have come more into the employment law spotlight with the advent of the coronavirus. This is because they have been recognised as being vulnerable to contracting the disease. They have also been more likely to be severely affected by it than younger people and/or people who don’t have any health issues.

In practice, these groups have been particularly concerned about self-isolating in order to avoid contracting the virus. They have therefore been more likely to be discriminated against by employers who have insisted on their employees attending the workplace if they wished to continue to get paid.

But if they were refused furlough because of their fears about the safety of the workplace, or have otherwise been subjected to unfair treatment in the pandemic, then they can bring a discrimination claim against their employer irrespective of how little time they have been employed.

Dismissal due to fears about health and safety at work

You do not have to have any kind of health condition or to have served 2 years with your employer in order to claim for ‘automatically unfair dismissal’ under section 100 of the Employment Rights Act 1996.

You would be automatically unfairly dismissed if, for example, you were dismissed because you refused to attend your workplace since you felt it was an imminent threat or a serious danger to your health and safety.

Covid-19 is considered to be a danger and a serious and imminent threat, so dismissal in such circumstances would most likely count as automatically unfair dismissal.

Our article on unfair dismissal tells you more about automatically unfair dismissal.

Pay cuts or other penalties related to health and safety issues at work

Similarly, you may have suffered so-called ‘detriments’ (or penalties/punishments) such as pay cuts or bullying, for refusing to attend, or deciding to leave, what you consider to be a coronavirus unsafe workplace.

In such circumstances, you again don’t need two years’ service to bring a claim to an employment tribunal under section 44 of the Employment Rights Act 1996.

Our article on unfair dismissal, paycuts and bullying because of coronavirus health and safety issues at work explains in more detail the above health and safety issues and practical implications of sections 44 and 100 of the Employment Rights Act 1996.

Other instances where the two-year rule doesn’t always apply

Monaco Solicitors have negotiated very high-value settlements for people with less than two years’ service who don’t fall into any of the above exception categories. They tend to be in cases where:

  1. The employee is very well paid and the company wants to ‘do the right thing’ for them. This latter scenario usually means that the employer doesn’t want to get a reputation in their field for treating highly-paid employees poorly, which will make it difficult for them to attract the best talent in the future.
  2. The employee is employed in a commercially sensitive position and the company wishes them to enter into a settlement agreement in order to sign up to restrictions post-termination (such as a restrictive covenant), and the company is willing to pay for this.

What can you do if you have less than two years’ service?

With the above important exceptions, the two-year rule means that if you have less than two years’ service and are facing any of the scenarios outlined elsewhere in this website, or if you have simply been dismissed, there is often very little that you or we can do about it.

Can you still negotiate a settlement agreement without two years’ service?

Having said that, there will always be other scenarios where a settlement agreement and a severance package – complete with ex gratia payment – will be achievable. But whilst we are optimists, we are also realistic and our experience suggests that, if you don’t have two years’ service or don’t fall into any of the above exception categories, the chances of your achieving a settlement are not very good.

Next Steps

Monaco Solicitors are specialist employment lawyers who only represent employees. Our team of experienced senior employment solicitors has particular expertise in negotiating settlement agreements for employees. 

We can most likely help you to negotiate a settlement agreement if you have been in your present employment for more than two years and have a valid legal case with supporting evidence. It’s possible that we could help you even if you’ve been employed for less then two years.

If you’d like to find out if we can assist you with your case, or if you’re not sure whether or not you are entitled to a settlement payment, do get in touch. We look forward to hearing from you.


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