Dismissing an employee with less than 2 years’ service

When dismissing an employee with less than 2 years service, it will be important for employers to be aware of the potential legal pitfalls.

While in most cases of employment under 2 years, the employer does not necessarily need to justify their decision to dismiss, or even follow a fair procedure, there are many reasons why it may be prudent to take a cautious approach.

The following guide looks at the legal position when dismissing someone without 2 years service, including the implications on notice period and pay, as well as how to ensure that the overall dismissal process is fair and lawful.

What does the law say about dismissing an employee with less than 2 years service?

By law, you can usually dismiss an employee with less than 2 years service without the need to demonstrate a fair reason for the dismissal, and with no positive obligation to go through a fair disciplinary or dismissal procedure. This is because employees only gain statutory protection against unfair dismissal after accruing two years’ continuous service with the same employer.

It may be that you do not think an individual is the right fit for your company or organisation, or there could have been various conduct or capability issues that have raised legitimate concerns. For the employee with less than 2 years service, this may mean that their contract of employment can be lawfully terminated, without further investigation or prior warning, and without the need for you to defend either your decision to dismiss or the way in which this is handled.

In contrast, where an employee has worked for you for 2 or more years, you would need to provide one of five fair reasons as set out under the Employment Rights Act 1996, otherwise risk exposing yourself to an unfair dismissal claim.

The statutory fair reasons for dismissing an employee include: capability; conduct; redundancy; breach of a statutory restriction; or some other substantial reason (SOSR). SOSR is a ‘catch-all’ provision that can permit an employer to fairly dismiss an employee where no other potentially fair reason applies.

For employees who have a right to claim unfair dismissal, you would also need to show that you acted reasonably in treating any one of these statutory reasons as sufficient for dismissal, and that you followed a fair process throughout.

Notice period & pay on dismissal

It is important to remember that whilst an employee will not usually be eligible to make a claim for unfair dismissal where they have not yet accrued 2 years continuous service, they could still be eligible to claim wrongful dismissal.

Wrongful dismissal is essentially a breach of contract claim, usually founded on the basis that the employee has been dismissed without notice or pay in lieu of notice. This means that, even when dismissing an employee with less than 2 years service, you must still provide them with any contractual or statutory notice period to which they are legally entitled.

Statutory notice is the minimum legal notice that can be given where, in the absence of any contractual entitlement, an employer should still give their employees one week’s notice if the employee has been employed continuously for one month or more but for less than 2 years.

In some cases, you may be able to justify summarily dismissing an employee, ie; without any notice or pay in lieu of notice. However, this is only where there is clear evidence of gross misconduct on the part of the employee, such as fraud, theft, physical violence, intoxication through either drink or drugs, serious breaches of health and safety, or serious insubordination.

Pitfalls of dismissing an employee with less than 2 years service

When looking to dismiss an employee with less than 2 years service, it can be tempting to shorten or even wholly circumvent any disciplinary, capability or redundancy procedures. However, you should always be mindful of the type of claims beyond ordinary unfair dismissal that you could be exposed to.

The main potential pitfalls that an employer should be aware of when dismissing an employee with less than 2 years’ service include:

• Automatically unfair dismissal
• Unlawful discrimination
• Breach of contract

Automatically unfair dismissal

When dismissing an employee with less than 2 years’ service, there are certain circumstances in which a dismissal may be classed as automatically unfair, and for which there is no qualifying period of service. This is because the law affords special protection to employees who are dismissed in circumstances where the dismissal violates their basic employment rights.

There are around 60 different grounds upon which an employee can claim automatically unfair dismissal including, for example, any reason connected to pregnancy and maternity; for asserting any statutory rights, such as the right to annual leave or the national minimum wage; for making a protected disclosure about wrongdoing in the workplace; or for raising a health and safety concern.

For example, if an employee is dismissed following a TUPE transfer, this may amount to an automatically unfair dismissal for which the reasonableness or procedural fairness of the employer’s decision to dismiss is irrelevant. However, this is the one exception to the ‘no qualifying service requirement’ rule, where an employee would still need to show 2 years service to have a valid claim.

Once an automatically unfair reason for dismissal has been established, you will no longer be able to justify or defend your decision to dismiss. There will also be no need for the employee to show that you failed to follow a fair procedure. The dismissal will be considered automatically unfair, with no further consideration as to either the reasonableness or procedural fairness of your actions.

If the employee is able to establish one of the automatically unfair reasons prohibited by law, the claim will succeed. You may then be ordered to reinstate or re-engage them. You will also be ordered to pay an award of damages comprising of both a basic and compensatory award.

Unlawful discrimination

If you dismiss an employee for a reason related to a protected characteristic, this could amount to both unlawful discrimination and automatically unfair dismissal. Under the Equality Act 2010 a protected characteristic includes age; disability; gender reassignment; marriage and civil partnership; pregnancy and maternity; race; religion or belief; sex; and sexual orientation.

As with a claim for automatically unfair dismissal, there is no qualifying period of service for an employee to be eligible to claim unlawful discrimination. Damages for a discriminatory dismissal are also calculated in a similar way to an unfair dismissal claim in terms of compensation for loss of earnings, although there is no cap on compensation in discrimination cases.

This means that you could be liable to pay the former employee an unlimited sum of money, regardless of how long they have worked for you. An award for injury to feelings is also payable where a finding of discrimination is made.

It will not always be obvious when a dismissal could be classed as being related to a protected characteristic. This could arise, for example, where an employee is dismissed for excessive absences from work where, without further investigation, you have failed to identify that this is as a result of a disability.

Here you would need to consider what reasonable adjustments could be made within the workplace, or to the employee’s working arrangements, such as amended duties or altered hours, before making any decision to dismiss. If you still decided to dismiss, you would need clear evidence that either the disability was not the reason for the dismissal or be able to justify the dismissal as a proportionate means of achieving a legitimate aim.

Breach of contract

When dismissing an employee with less than 2 years’ service, even though you do not necessarily need to justify your decision, a fair process should still be followed in cases where there is a contractually binding disciplinary policy or dismissal procedure set out under the employee’s contract of employment.

Any failure to follow these procedures, for example, failing to undergo an investigation into any misconduct or capability issues, or failing to provide a written warning prior to terminating someone’s employment, may constitute a breach of contract for which the employee could claim damages against you.

Dismissal advice for employers

Even though it may be perfectly appropriate to fast track a dismissal process, it is always best, where at all possible, to exercise some caution so as to avoid the potential pitfalls and mitigate the risk of legal action being taken against you.

In particular, by following a fair dismissal procedure, this can help you to head off any allegations of unlawful discrimination, not least by clearly setting out your reasons for dismissal and keeping a clear paper trail of your decision-making to demonstrate that the reason for dismissal was not unlawful.

By following a fair procedure, this will also demonstrate to other staff that you are a caring and reputable employer, willing to give people the opportunity to improve where there have been capability or conduct issues. In this way, you will help to protect your reputation and maintain good employee relations.

You may also benefit from retaining a potentially worthwhile member of staff, simply in need of either training or adjustments to the way in which they work.

It is important to remember that when dismissal is on the grounds of ill health or capability to do the job, then consideration must be given as to whether there could be an underlying disability that is impacting on an employee’s performance for which reasonable adjustments may need to be made.

Best practice procedure when dismissing an employee with less than 2 years service is as follows:

Invite them in writing to a formal meeting, advising them that this meeting might result in their dismissal. You should also provide them with a right to be accompanied at this meeting, explaining that they or their representative will be given an opportunity to respond.

Following the meeting, carry out any necessary further investigations, in this way demonstrating that you have listened to their response and are now acting on this. Where no further investigations are needed and you have sufficient evidence to make a final decision, adjourn for a short period of time to demonstrate you are considering the situation and did not reach a conclusion before they had a chance to respond.

Where you need more time to decide, reconvene at a later date so that you may formally notify the employee of your decision face-to-face. Where it is not considered appropriate to issue them with a written warning, or other form of disciplinary sanction, you should also notify them of your decision to dismiss in writing, providing reasons why and giving them the right to appeal within 5 days of your dismissal decision.

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Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.