Dismissing Employees with less than two years service

The General Rule

The general rule is that if an employee has not been employed for long enough to qualify for the right to claim unfair dismissal they can be dismissed on lawful (i.e. contractual or statutory minimum) notice.

At the time of writing (2020) an employee needs two years continuous service to qualify to claim normal unfair dismissal under Section 94 ERA.

However, caution should be employed in such cases because there are many exceptions where ‘day one’ rights engage.

These fall into two categories (see below for more details): 

  • Automatic Unfair Dismissal Rights (i.e. ‘Protected Acts’)
  • Discrimination Rights (i.e. ‘Protected Characteristics’)

We will refer to these as ‘Prohibited Reasons’ below.

Best Practice Process

An employee without two years’ service and who has not been dismissed because of a Prohibited Reason will not be able to succeed in any statutory claim against their ex-employer.

It is nevertheless sensible to follow these steps:

  • Produce a written list of the important underlying reasons for considering dismissal. Make sure this list includes examples (i.e. what happened, dates, who was involved, etc).
  • Sense check these reasons: do they relate (either directly or indirectly) to any Prohibited Reason?  If in any doubt about this take advice from HR.
  • Invite the employee to a meeting to discuss the underlying reasons.  The focus of this meeting is to provide transparency about the underlying reasons so that the employee can understand the rationale for dismissal.  It is not necessary to argue the merits of the reasons and a discussion at cross purposes should be side-stepped.
  • Take (and keep) a note of what was said in the meeting.
  • Include a very brief summary of the reasons for dismissal in the notice of termination letter (bullet points are fine).
  • Whilst a formal appeal procedure is unnecessary, include wording to this effect in the notice letter: ‘If you have any concerns about the decision to terminate your contract of employment please put them in writing and we will respond if it is appropriate to do so’. I call this a ‘soft appeal’.  A template letter is available here.

The ‘Golden Rule’

The most important consideration in these types of dismissal is to be consistent and credible with the underlying reasons for dismissal. 

It is correct to say that the employee has no right to an explanation and that their contract can be lawfully terminated on notice. 

However, where no reasons are given, or the rationale for dismissal does not make sense (or is muddled or otherwise confusing), the employee – and possibly an Employment Tribunal – may consider that the true reason lies elsewhere (and that it is a Prohibited Reason).  Our focus is to avoid this impression.

Why follow this process?

  • The evidence will support the reason/s for dismissal and any a claim by the employee that the real reason was a Prohibited Reason will be ill advised and likely to fail.
  • If the employee is considering claiming that Prohibited Reasons influenced the decision then this should come to light in the meeting or in the ‘soft appeal’.  We can then address their concerns.
  • If the employee says nothing about a Prohibited Reason (either in the meeting or by ‘soft appeal’) then any claim they later take will lack credibility.
  • If a claim against the company were to succeed, basic procedural fairness will be present and an uplift to any award that is made will be much less likely.

Wrongful Dismissal

This is not to be confused with ‘Unfair Dismissal’, ‘Wrongful Dismissal’ simply means that the lawful (contractual or statutory) notice period has not been given.  

The remedy for a wrongful dismissal is confined to the pay that would have been received during the notice period.

This applies in all cases except those where the Employee is dismissed because of gross misconduct or some other serious breach of the employment contract.  In these types of cases the employee can be dismissed ‘summarily’ (which means without notice or pay in lieu of notice).

The Employee’s contract will say what notice the Employee is entitled to receive to end their employment.

If it does not, or if it provides for less than the statutory minimum notice period, then the statutory minimum notice period applies.

The statutory minimum notice period is one week for employees with up to two years service, two weeks after two years, and an additional week for each complete year thereafter up to a maximum of twelve weeks notice (after twelve years service).

Automatic Unfair Dismissal Rights

Dismissals in these circumstances will be automatically unfair and there is no requirement for qualifying service.

  • Dismissal connected with pregnancy, childbirth, maternity or paternity leave adoption leave, parental leave or time off to care for a dependent (S 99 ERA).
  • Dismissal that is related to health and safety (S 100 ERA).
  • Dismissal for refusal to work Sundays (in the case of shop or betting workers) (S 101A ERA).
  • Dismissal for exercising a right under the Working Time Regulations.
  • Dismissal due to performing functions as a trustee of an occupational pensions scheme (S 102 ERA).
  • Dismissal related to the functions of an employee representative under the TUPE Regs or collective redundancies legislation (S 103 ERA).
  • Dismissal because the employee made a protected disclosure (i.e. whistle-blew) (S 103A ERA).
  • Dismissal because the employee asserted a relevant statutory right (S 104 ERA).
  • Dismissal due to exercise of a right under the National Minimum Wage Act (S 104A ERA).
  • Dismissal for taking action in relation to a tax credit (S 104B ERA).
  • Dismissal relating to membership of a trade union (S 152 TULR(C)A).
  • Dismissal due to participation in protected industrial action (S 238A TULR(C)A).
  • Dismissal due to exercise of rights in relation to the protection of part time workers (Part Time Workers (Prevention of Less Favourable Treatment) Regs 2000).
  • Dismissal due to performing functions in connection with the transnational information and consultation Regs.
  • Dismissal due to asserting rights in relation to the protection of fixed term employees (S 104C ERA).
  • Dismissal due to attending jury service (S 98B ERA).
  • Selection for redundancy for any of the reasons above (S 105 ERA).
  • Dismissal connected with a TUPE transfer where an economic, technical or organisational reason does not apply (Transfer of Undertakings (Protection of Employment) Regs 2006).
  • Dismissal for failure to disclose spent convictions (S 4 (3) (b) Rehabilitation of Offenders Act 1974). Note that the Act does not apply where the employment involves: working with children or vulnerable adults, senior banking or financial roles, law enforcement, the judiciary, the police, national security, prison service, health, pharmacy, the law and private security work.

Discrimination Rights

If the dismissal is because of a protected characteristic so as to qualify for protection under the Equality Act 2010, it will be actionable as unlawful discrimination, for which no qualifying period applies.

The characteristics protected under the EA are:

  • Age
  • Disability
  • Gender reassignment
  • Marriage and civil partnership status
  • Pregnancy and maternity
  • Race
  • Religion or belief
  • Sex (i.e. gender)
  • Sexual orientation
  • Asserting* that discrimination has taken place on the grounds of one of the above (i.e. victimisation)

*Note that discrimination does not have to have taken place, it is sufficient for the employee to have asserted that it has.

Policy Considerations

Company policies that relate to dismissal often require warnings before dismissal.  This does not mean the employer cannot lawfully terminate employment without first issuing warnings where an employee has less than 2 years’ service*.

*this is because: (i) the right to complain about fairness requires 2 years’ service, (ii) policies are usually not contractual, (iii) policies often make it clear that the employer may choose not to follow some or all of their requirements where this is deemed suitable.