Navigating the dismissal process for short service employees

Any decision to dismiss an employee with less than two years’ service has generally been seen as risk free - and we should fairly soon find out if it will continue to be the case.

Labour in its employment-related pledges has said it plans to expand ‘day one’ rights to include protection against unfair dismissal and the right to redundancy pay.

Currently both are only available if an employee has worked for an employer for two years or more.

With a general election widely anticipated to take place later this year, the plan could become a reality sooner rather than later.

The latest a Parliament can be dissolved for a general election is on the fifth anniversary of the day it first met [1] cited 15.5.24For the current Parliament, that means 17 December 2024.

However, 25 working days are then allowed to prepare for the election. So, the next election must be held by 28 January 2025.

The latest betting odds have Labour leader Keir Starmer as the favourite to be the next Prime Minister after the general election [2] cited 15.5.24

It does mean that if the pledge of protection from unfair dismissal from day one becomes policy, employers will have to adapt quickly.

Deputy leader Angela Rayner vowed the party will enact its blueprint within 100 days if it wins power, stating that there is no intention of watering down the plans [3] cited 15.5.24

So, if the bookmakers are right, and the policy introduced in the timeframe stipulated, then this time next year it will be a reality.

It does mean it is definitely worth taking a closer look at the Labour proposal in the relevant section of its Employment Rights Green Paper, which does state [4] cited 15.5.24

Labour will give all workers day one rights on the job

Labour will also strengthen the protections afforded to all workers by ending the qualifying periods for basic rights.

The current arbitrary system leaves workers waiting up to two years to access some basic rights, including protection against some types of unfair dismissal.

Labour will end this arbitrary system and scrap qualifying time for basic rights, such as unfair dismissal, sick pay, and parental leave.

The reaction to the plan has been mixed. A Trades Union Congress (TUC) study showed extensive support for the proposal. [5] cited 15.5.24

The research, which was conducted last year, revealed that on day one rights: two in three (67 per cent) support all workers having a day one right to protection from unfair dismissal – including 61 per cent of Conservative 2019 voters. While 16 per cent of UK adults oppose it.

Reports show that trade unions fear Kier Starmer may come under pressure from businesses to water down his plans, which also includes curbs on the use of zero-hours contracts and the extension of collective bargaining [6] cited 15.5.24

The proposal to extend protection against unfair dismissal would have significant implications for all employers.

Businesses are likely to face a greater administrative burden as they will need to ensure HR policies and procedures are compliant from the outset of an employee’s tenure.

In addition, the financial impact on businesses could be considerable.

Organisations may need to allocate more resources to legal services and training to avoid potential claims.

And there is also the possibility the cost of resolving disputes or paying compensation for unfair dismissal claims could rise.

Smaller enterprises, especially, may find it challenging to adapt to the change due to limited HR capabilities and resources. They are much more likely to need additional support to navigate any new legal landscape.

While the intention behind the proposal is to provide greater security and protection for workers, businesses will need to carefully consider the implications and prepare for any possible changes to employment law.

While it is always worthwhile to look ahead to what may be to come, it is important to focus on the present and the common misconception that an employee with under two years’ service has no rights.

Any decision to dismiss an employee should never be taken lightly, regardless of their length of service. Employers should always act fairly to avoid potential legal consequences.

The legal position

Employees currently gain statutory protection against unfair dismissal if they have two years’ of continuous service or more.

It does mean that for those with less service the risk of dismissal is much greater.

Although in such cases an employer does not necessarily have to justify its decision to terminate the employee’s contract, or follow a fair procedure in doing so, it is still advisable to take a cautious approach.

The need to be careful

There are, of course, certain situations in which an employee with short service can be found to have been dismissed for reasons that are ‘automatically unfair.’

This can happen if an employee is dismissed as a direct result of a protected characteristic covered by the Equality Act 2010 e.g. race, age, disability, sex etc [7] cited 15.5.24

A dismissal can also be found to be automatically unfair if an employee with under two years’ service is a whistleblower.

A mortgage protection advisor was awarded £23,127 when she was dismissed before completing two years of service. The employment tribunal found that she was a whistleblower, having made a protected disclosure, and therefore was the victim of automatic unfair dismissal. [8] cited 15.5.24

Dismissals for trade union activities or as a result of asserting a statutory right also do not require any length of service, and can lead to claims regardless of how long the employee has worked for an employer.

Can they be sacked without pay?

Although at present an employee cannot make a claim for unfair dismissal with under two years’ service, they can still make one for wrongful dismissal [9]

This can happen in cases where an employer breaches an employee’s contract e.g. the employee is dismissed without notice or pay in lieu of notice.

An employee must get at least the statutory notice period, the minimum legal notice, if they have been employed continuously for one month or more but less than two years. For one month to two years’ service, the statutory notice is one week.

If an employee is dismissed for any proven act of gross misconduct e.g. violence, fraud or theft, then in some circumstances an employer may be able to justify summarily dismissing an employee without any notice or pay in lieu of notice.

Best Practice

To minimise any risks when dismissing an employee with less than two years’ service, employers should:

Follow a fair procedure – do not cut corners, be thorough and reasonable and exercise caution to mitigate any risk of legal action.

Document everything – it is important to maintain an evidence trail and keep records of all decisions, meetings, and communications related to the dismissal.

Be consistent – to avoid any claims of unfavourable treatment or unlawful discrimination apply the same procedures to all employees.

Communicate clearly – do not be complacent or dismissive and make sure the employee fully understands the reasons for their dismissal.

Seek expert advice: If unsure, it is always advisable to speak to an employment law specialist to navigate the complexities of the dismissal process. You can do so by contacting our Employer Support Centre.