Dismissal close to two years service – what employers need to know?

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Most people are aware of the fact that the legal risks attached to dismissals are significantly reduced where an employee has less than two years’ continuous employment.

The main reason for this is because without that length of service an employee is unable to bring an ordinary unfair dismissal claim, and the employer does not need a potentially fair reason to dismiss. It’s important to bear in mind that this doesn’t remove legal risks entirely, for instance there are no minimum length of service requirements attached to discrimination claims and some automatically unfair dismissal claims.

For that reason, it is always best practice to put in place some form of process to create an audit trail of your reasoning for the dismissal – this mitigates any potential legal risks.

However, does the position change at all if someone is very close to obtaining two years’ service?

The first point to bear in mind that continuous service is based on calendar years. So, if an employee started employment on 1 January 2023, they will obtain two years’ service on 31 December 2024 – not 1 January 2025.

Crucially, however, is the fact that an employment tribunal will add the statutory minimum notice period on to an employee’s length of service when they are dismissed just before obtaining two years’ service.

This basically means that a tribunal will add a week on to the length of service given this is the statutory minimum notice period for anyone who has worked for you more than one month but less than two years.

As a consequence, if an employee was dismissed without any process at all one day before they obtained two years’ service, the tribunal would treat the employee as having two years’ service as they would add on the statutory minimum notice they would have received. This irrespective of whether you pay in lieu of notice to bring the contract to an end immediately – the week will still be added on and as a result they will be able to proceed with an unfair dismissal claim.

That will mean all of the usual legal principles will apply, potentially creating significant legal risk if procedural corners have been cut on the understand that they don’t have the length of service to bring a claim on that basis.

So, the key takeaway from this is that if you have an employee with less than two years’ service who you are considering dismissing, ensure that this is done well before someone edges towards being employed with you for two years. That will ensure that the legal risk attached to the dismissal is significantly reduced (though not removed entirely).

If you have any queries about the above or dismissals generally, or require any support with managing such issues, please contact the advisory team on 01274 864 999.

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