Wed 10 Aug 2022

Dismissing employees with less than two years' service

Our 2023/24 Employment Law Fact Card is now available It is a common misconception amongst employers that dismissing an employee who does not have two years of service will mean that they are "safe" from an employment tribunal claim. This often leads employers to dispense with their usual disciplinary, capability and redundancy procedures when dealing with the dismissal of an employee with less than two years' service. However, although it is true that, in many situations, dismissing an employee who does not have two years' service will be low risk, there are a range of exceptions to the rule.

Qualifying service rule

In fact, rather than it being two years, the basic rule is that employees require 103 weeks of service in order to bring an ordinary unfair dismissal claim.  This is because for the purposes of an unfair or constructive dismissal claim they would be allowed to include their statutory entitlement to 1 week's notice which gets them across the finishing line of 2 complete years' service. 

The exceptions

Given that unfair dismissal is one of the better known and frequently invoked employment rights, it is often at the forefront of employers' minds when considering dismissal. The assumption is often made that if the qualifying service requirement isn't met then there is no risk of a claim arising from the dismissal. However, there are significant exceptions to the general rule on qualifying service and there are other claims linked to dismissal which have no qualifying service requirement (such as a claim that the dismissal was discriminatory). This means that close scrutiny should be given to the reason for, and circumstances of, dismissal.

The following are the key exceptions which arise most frequently in practice and should be borne in mind:

Is the dismissal discriminatory?

Dismissals which take place for a discriminatory reason will be actionable irrespective of length of service. Therefore, although the employee may not be able to claim unfair dismissal, if they have less than the qualifying service, they could claim that their dismissal was discriminatory. Compensation for a discriminatory dismissal is calculated in a similar way to an unfair dismissal claim in terms of compensation for loss of earnings except there is no cap on compensation in discrimination cases and an injury to feelings award is also payable where a finding of discrimination is made.

In light of this when considering dismissal employers should consider whether the reason for dismissal is linked in any way to a protected characteristic. The protected characteristics are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. In particular, when dismissal is on the grounds of ill-health or capability to do the job then consideration should be given as to whether there could be an underlying disability.

Is the dismissal for making a protected disclosure (i.e. a "whistleblowing" complaint)?

Where an employee has made a "protected disclosure" and is dismissed because they made that disclosure, they can claim unfair dismissal irrespective of length of service. A protected disclosure is a disclosure of information made by an employee which that individual reasonably believes shows that one or more of the 6 types of malpractice set out below has taken place, or is likely to take place (commonly known as a whistleblowing complaint):

  • Criminal offences
  • Breach of any legal obligation
  • Miscarriages of justice
  • Danger to the health and safety of any individual
  • Damage to the environment
  • The deliberate concealing of information about any of the above

This situation sometimes arises where an employee has raised a grievance alleging that they have been mistreated by their employer in some way, and they are subsequently dismissed for being a "troublemaker". Depending on the circumstances this may amount to a protected disclosure and there is a risk of a claim.

Is the dismissal for a health and safety reason?

Where an employee has been designated to carry out activities in connection with preventing or reducing risks to health and safety at work, or where the individual is the workplace health and safety representative or member of a workplace safety committee, or is an employee who has raised health and safety issues with the employer, who has left or stays away from a dangerous workplace or who has taken action to prevent danger any dismissal relating to the employee carrying out these activities is automatically unfair and no qualifying period is required to bring an unfair dismissal claim.

Has the individual asserted a statutory right?

Where an individual asserts a relevant statutory right, or raises a claim to enforce a relevant statutory right then any dismissal for that reason will be unfair irrespective of length of service. The relevant legislation identifies the various statutory rights which are captured by this exception. These include (but are not limited to) asserting rights under the Working Time Regulations (such as the right to statutory holiday or rest breaks), rights conferred under the Transfer of Undertaking (Protection of Employment) Regulations 2006 and asserting that an unlawful deduction from pay has been made.

Is the employee a trade union representative?

If an employee is a trade union representative or has taken part in trade union activities, and dismissal is for that reason, then it will be unfair regardless of the individual's length of service.

Does the employer have a contractual disciplinary or redundancy policy?

Some employers' dismissal processes are contractually binding. This means that if the employer does not follow their own procedure in dismissing an employee then the dismissed employee may have a claim for breach of contract and be in a position to claim damages resulting from the breach of procedure. There is no qualifying service requirement in order to bring a claim of breach of contract. If employers do have contractual dismissal processes then it is worthwhile considering making it non-contractual or adding a section to the effect that the rules will not apply during the first two years of employment in order to avoid this risk. Making a contractual policy non-contractual is not altogether straightforward and advice should be taken before doing so.

The other exceptions to the service requirement include when the dismissal is for a reason connected to:-

  • carrying out jury service;
  • exercising maternity, parental or time off for dependants rights;
  • refusal of Sunday working;
  • exercising rights under working time legislation; 
  • exercising rights under national minimum wage legislation;
  • exercising rights in relation to working tax credits;
  • the making of a flexible working application;
  • requests for time off for study and training;
  • selection for redundancy for an automatically unfair reason;
  • involvement in trade union recognition or bargaining;
  • taking part in protected industrial action;
  • performing the functions of a works body member, rep, candidate or participant;
  • performing the functions of a pension consultation rep;
  • exercising rights under part-time workers legislation;
  • exercising rights under fixed term employees legislation;
  • exercising the right to be accompanied;
  • performing the functions of a working time rep;
  • performing the functions of a pension trustee;
  • performing the functions of an employee rep; and
  • membership or non membership of a trade union or partaking in trade union activities.  

Minimising the risk

It is tempting to fast track dismissal processes where the individual has less than two years' service, and in some situations it is appropriate and legitimate to do so. However it is important that employers are mindful of the fact that there are exceptions to the general principle, such as those outlined above. Employers should always keep an appropriate paper trail in order to demonstrate that the reason for dismissal was not unlawful.

If there are any circumstances which could give an employee with less than two years' service the right to make a claim (for example the making of a protected disclosure shortly before a redundancy procedure where the employee is selected) we recommend that legal advice is sought at an early stage.  This will allow the level of risk to be assessed and steps to be taken to ensure that, if an employee were to make a claim, you will be in the best position possible to defend the claim.

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