Expert employment lawyer and HR problem solver, Catherine Wilson, writes about the legal technicalities of short service dismissal.
What is a short service dismissal and how can businesses get it right?
It is an urban myth that short serving employees can be dismissed summarily and without due process. All employers need to be aware that these short service employees may still have the protection in certain specific circumstances and therefore employers need to understand how to protect themselves against Tribunal claims.
So, who is a short serving employee?
All employers, irrespective of size, should be familiar with the concept of protected dismissals and the significance of the so called “qualifying period”. The duration of the qualified period has varied significantly over the years however is currently 2 years less one week. Ordinarily employees need to have been employed with the same employer for the minimum period of 23 months and 3 weeks to make a claim for statutory unfair dismissal.
Dismissals before the employee has acquired this length of service are known as “short service dismissals”. If an employee is able to establish an automatically unfair or discriminatory reason for their dismissal, in most cases there is no qualifying service period. This is often described as a “Day one” employment right. There are around 60 different grounds upon which an employee with less than two years service can claim automatic unfair dismissal.
When is a short service dismissal protected?
Many of these grounds are obscure, however the most common grounds include any reason to do with pregnancy and maternity, the assertion of statutory rights (such as the right to annual leave or the national minimum wage), making a protected disclosure about wrongdoing in the work place (often described as whistleblowing), or for raising a health and safety concern including concerns about COVID-19. Also, if an employee is found to have been dismissed for a reason related to one of the 9 protected characteristics, as defined in the Equality Act 2010, such as race, sex, age and disability, this could amount to unlawful discrimination and automatically unfair dismissal.
What are the legalities around short service dismissals?
In strict legal terms, and providing there is no contractual obligation to follow a prescribed procedure, an employer arguably does not need to go through a formal disciplinary or dismissal procedure. Due to risk of an employee subsequently alleging that their dismissal is automatically unfair, however, an employer would be well advised to ensure that they follow some procedure, however brief, before affecting a dismissal of a short service employee. This is described below.
Any process should enable the employer to flush out any underlying concerns and potential automatically unfair reasons. Not only are certain characteristics neither obvious nor visible, the use of a process should enable the employer to demonstrate, if required, that the stated reason for dismissal is the real one. For example, if an employer dismisses an employee for redundancy without there being any paper trail to support that being the real reason, the employer may find it difficult to defend a subsequent claim that the real reason was that the employee had previously raised a grievance against the employer.
An employer should be aware of other legal pitfalls. The starting point should be the correct calculation of the employee’s length of service. Only in this way can an employer determine whether an employee is properly characterised as a short service employee. An employer must count both the first and last day of employment, for example, if some one starts employment on 12 August and notice of dismissal expires on 11 August, two years later, they will qualify for unfair dismissal protection.
In circumstances where the employee is quickly approaching two years' service, an employer may be tempted to give insufficient or no notice of dismissal. It is for this reason that section 97 of the Employment Rights Act 1996 operates to extend the employee’s effective date of termination. For employees with under two years’ service this effectively means that an additional week will be added onto their termination date. The only exception to this rule is where the employer can show that it was entitled to dismiss the employee summarily for gross misconduct.
Employers must also take care to consider the implications of the employee’s previous employment with the business or a linked company. In particular, periods of temporary employment may be considered as continuous for the purposes of calculating statutory employment rights. Employees who transfer under a business sale also have their previous service treated as continuous.
Finally, the focus of this article is on the statutory employment rights. A short serving employee retains their existing, contractual, notice entitlements. These are largely dependent upon the employee’s contract of employment or statement of terms and conditions and irrespective of their length of service. A short serving employee will also retain their right to receive payment in lieu of accrued but untaken holiday entitlement.
What is a good process for a short service dismissal?
It is a condition of many contracts that the employment is subject to satisfactory completion of the initial, probationary period of between 3 to 6 months or such other longer period as shall be imposed by the employer. This is the original type of short service dismissal. The probation process needs to be clearly documented in writing and combined with active management and monitoring during the probation period. A dismissal due to failure to complete probation can still be an automatically unfair dismissal; however, if the probation period is properly managed, this can help justify dismissal.
Once the probation period has been satisfactorily completed, or in the absence of any probationary period, an employer has two options below:
- Some employers will choose to utilise the same disciplinary, performance management or sickness absence procedure for all employees, irrespective of length of service.
- Others may prefer to implement a separate, abbreviated procedure. This shortened process will still comply with best practice and mitigate the risk of legal action being taken against the employer. The non-contractual policy should be documented in writing and readily available for reference by employees and managers. Any process should be commenced by a formal written invitation with reasonable notice. This invitation should specify, in summary, the grounds for concern and include both the right to be accompanied at the meeting and forewarning the employee that the meeting may result in dismissal. This process will include a formal, face-to-face or virtual, meeting with the employee. Following this initial meeting, further enquiries ad investigations can be conducted into the employee's response. The meeting can then be reconvened and the employee formally notified of the decision, be that a warning or dismissal. Consideration could also be given to the offer of an appeal against the decision.
Read more from the myhrtoolkit blog
What is a settlement agreement?
Written by Catherine Wilson
Catherine is an expert employment lawyer and HR problem solver. She works as an Employment Partner at W Legal Limited and also runs her own employment law and HR consultancy, training, and writing business, McBrownie Ltd.