Termination of Employment – Short Service

One of the more common issues we advise clients on is the termination of employment where the member of staff had relatively short service. This is only natural as such employees will often not proved themselves to a company in the way a longer serving employee will have.

Legally dismissing a short service employee is normally a more straightforward and less risky process but it is important to still follow a basic process and be aware of some common pitfalls and therefore we have put together this guide for employers.

What is the legal position?

For an employee to be able to claim unfair dismissal, as a general rule they must have two years of continuous service with the Company. If they do not, then they cannot challenge the fairness or process followed if their employment is terminated.

There are however various exceptions to this rule and these are called automatic unfair dismissal claims where the employee alleges that they were dismissed principally or solely for a specified reason. These include:

  1. Any dismissal related to pregnancy, maternity or pregnancy-related illness
  2. Any dismissal because an employee reasonably refused to carry out a task on health and safety grounds
  3. Any dismissal because an employee has made a protected disclosure (also known as whistleblowing) – this normally involves reporting alleged unlawful conduct within a business such as fraud, environmental pollution or discrimination
  4. Alleging a statutory right, for example, the right to a contract of employment or to be paid the minimum wage
  5. Being a member of a Trade Union or engaging in lawful trade union activities
  6. To avoid paying Statutory Sick Pay

Additionally, there is no minimum service requirement to bring a discrimination claim under the Equality Act 2010.

An employee within only one day’s service can bring claims for automatic unfair dismissal or discrimination and therefore is important to consider whether or not there are any concerns they could bring such a claim and if so, seek further advice.

What process should I follow?

If you are satisfied that none of the above circumstances apply and you intend to dismiss with notice then the process can be as straightforward as asking to speak to the employee privately (you may wish to have a second person present as a witness) to explain the decision and give them a letter confirming the termination and the details regarding final pay etc.

If however, there are concerns that the employee may try to make a claim of the type outlined above then it is recommended that a more robust process is followed. This may still be less onerous than a full disciplinary or performance management process but should still include the employee being invited to a formal meeting to discuss the issues which may lead to dismissal so that they have the opportunity to state their case. This will also be an opportunity for the Company to see if the employee is likely to allege any form of discrimination or automatic unfair dismissal.

Do I need to give a reason for termination?

It is not a legal requirement to provide a reason for dismissal for an employee with less than 2 years’ service or to provide a written letter of dismissal. However, we strongly recommend that you do both; this will confirm in black and white the reason for dismissal and can be relied on if the employee subsequently tries to suggest the dismissal was discriminatory or automatically unfair.

What about notice?

An employee will still normally be entitled to notice of dismissal even though they have short service.

Notice provisions should be set out in the contract of employment but in any event, the legal minimum will apply, which is one week’s notice after the employee has completed one month of employment.

Notice must be given or paid unless it is a gross misconduct dismissal; this means that the employee must have been in serious breach of contract such as guilty of:

  • Fraud or theft
  • Bullying or assault
  • Discriminatory conductA serious
  •  breach of health and safety rules

Except in blatant instances of gross misconduct we would recommend that you hold a disciplinary meeting with the employee to address the allegation of gross misconduct before making a decision on whether to dismiss with or without notice.

Where notice is given then you will need to decide if the employee will be required to work it, placed on garden leave or dismissed immediately with pay in lieu of notice and adjust the termination letter accordingly.

If an employee fails to work their notice when required to then you should seek advice on your options.

Final wages, holiday pay and deductions

Final wages should be paid in accordance with the normal payroll process including payment of any accrued annual leave which has not been used.

If your contract of employment or other agreed document provides for deductions to be made from the final pay, such as for excess annual leave which was taken then you should ensure these are detailed either on the final payslip or the termination letter.

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