“An employee is coming up to two years service. Can I dismiss?”

Background

“How much service do they have?” -  the first response by employment lawyers when clients provide a scenario ending with the question, how risky would it be to dismiss?

Under UK employment law, the two year service requirement is a key milestone in an employment relationship. With some well known exceptions, known as “automatic unfair dismissals”, it is only at this point that employees can bring claims for ordinary unfair dismissal or constructive dismissal. This has been the case since 2012 and is well known to lawyers and employers alike.

However, what is not widely known by employers is that Employment Tribunals have the power to extend an employee’s effective date of termination (the EDT) in specific circumstances. Under s.86(1) of the Employment Rights Act 1996, where an employee is dismissed with immediate effect, whether that is with a PILON or without any prior notice whatsoever, a Tribunal will add on the statutory minimum notice period they should have received onto the termination date to see if an employee has two years’ service. In practice this means that an employee dismissed in the week leading up to their two year milestone is likely to satisfy the criteria for two years’ service and be able to bring an unfair dismissal claim. 

What, however, has never been answered by the Tribunals is what happens where an employee is dismissed for gross misconduct and an employer has the right to summarily dismiss. Does the employee still receive the benefit of the statutory extra week under S86(1)? In July 2018 we finally received the answer to this long sought after question from the Employment Appeal Tribunal (EAT) in the case of Lancaster and Duke Ltd v Wileman.

Ms Wileman was an employee with Lancaster & Duke Ltd. Two days before her two year service milestone she was summarily dismissed by the company who had failed to follow any sort of disciplinary procedure. Bringing a claim in the Employment Tribunal, Ms Wileman argued that she should benefit from the s.86(1) extension meaning she had the requisite service to bring a claim. The tribunal agreed and taking into account the lack of any formal process by the company, the Tribunal found that she had been unfairly dismissed. The company appealed the decision to the EAT.

During the hearing the EAT focused on the employer’s argument that the s.86(1) extension should be overridden by an employer’s right to summarily dismiss in cases of gross misconduct. In considering its decision, the EAT took into account leading law journals and Parliament's intentions when drafting the Employment Rights Act 1996. In its judgment and, after detailed consideration, the EAT sided with the employer. In a first of its kind judgment the EAT confirmed that where a dismissal is by reason of gross misconduct, the employee will not benefit from the one week statutory extension to the EDT. 

This case provides such much needed clarity for employers and lawyers alike. The right to summarily dismiss without triggering the one week statutory extension had long been considered the correct interpretation of the Employment Rights Act and it is pleasing that the Tribunals have now confirmed this.

What should you be doing now?

Whilst this in no way provides carte blanche for employers to dismiss at will prior to the two year qualifying period, it does provide relief for employers concerned about dismissing close to the two year milestone.

Employers should note however that any decision to dismiss for gross misconduct in such circumstances will be closely examined by the Tribunals and a sham gross misconduct dismissal will likely still mean an extension under s.86(1) will still be allowed.

What does this mean for your business?

Employers should always be careful about dismissal in any circumstance, be that prior to the two year qualifying period or after. As mentioned above, there are a number of 'automatically unfair' reasons for dismissal which employees do not need two years' service in order to bring.

The scrapping of Employment Tribunal fees in 2017 has seen a huge spike in claims brought against employers, many of which are for the various forms of discrimination where there is no requirement for employees to have two years’ service. 

If in doubt, always seek legal advice prior to dismissing. What may cost you a small sum in legal fees at the outset may save you in the long run.

Recommended Reading

A copy of the Employment Appeal Tribunal’s judgment can be found HERE.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.