Lucy McLynn and Kyle Hefford recap ten practical issues when planning to terminate an employee before they reach two years’ service

One employment-related by-product of the pandemic which has not received much attention yet is that a lot of performance management and monitoring has not taken place since the start of 2020 as it would normally have done.  In a number of instances this is resulting in employees starting to approach two years’ service who are not performing satisfactorily, but where this has not been addressed.  Probation reviews, appraisals and even management feedback and conversations have in many cases not happened because of businesses, understandably, having more pressing priorities.  As under-performing staff may now be approaching two years’ service it is timely to recap on the practical issues to bear in mind when planning to terminate an employee before they reach two years’ service.

  1. The fact that an employee has passed their probation period – either through being formally confirmed in post, or through being treated as having passed it due to the lapse of time – is not a barrier to a subsequent decision being taken that things have not worked out. 

  2. It may be necessary to determine whether an employee is contractually still under their probation period, as notice will generally be shorter during probation.  The exact wording of the contract will need to be considered, as well as other communications with the employee during their employment. It is important to remember, however that, even during their probation period, employees with over one month’s service are entitled to a minimum of one week’s notice unless they are being summarily dismissed for gross misconduct.

  3. If the contract expressly includes a disciplinary/capability process as a contractual term applicable to the employee, you would need to follow that process before dismissing or risk a breach of contract claim.

  4. If an employer is terminating employment with immediate effect it is necessary to have terminated employment one clear week before the employee would acquire two years’ service (because the statutory one week’s notice is automatically added on to length of service).  So, if an employee started employment on 1 December 2019 it would be necessary to terminate their employment no later than 22nd November 2021 to avoid them attaining two years’ service (the two years being complete on 30 November 2021).

  5. Contractual notice needs to be paid (unless there has been gross misconduct entitling the employer to dismiss the employee summarily) but it does not increase the employee’s length of service.  It is essential, however, to terminate employment with immediate effect and make it clear that notice is being paid in lieu.  Wording the termination letter appropriately is essential.

  6. If an employee is terminated with less than two years’ service then it is not necessary to give them a reason for dismissal.  The statutory right to be told the reason for dismissal only applies once an employee has two years’ service.  It is always advisable to give a reason, however, to pre-empt allegations of discrimination, or, for instance, automatically unfair dismissal by reason of whistleblowing.

  7. Bear in mind that employees do not need two years’ service to bring claims for automatically unfair dismissal, which apply when the employee is dismissed for certain reasons, such as family reasons, health and safety, working time reasons and whistleblowing. Compensation where the employee has been dismissed for whistleblowing is uncapped.  Employers should also, of course, not dismiss an employee with less than two years’ service due to a protected characteristic under the Equality Act 2010 as no length of service is required  to bring a claim of discrimination.

  8. Communication of termination of employment needs to be received by the employee in order to be legally effective. A face to face actual or virtual meeting or a phone call is the best way to communicate termination in a time sensitive situation, with a follow up in writing. 

  9.  Where you are paying in lieu of notice, ensure that the P45 reflects the actual termination date not the end of notice period.

  10. Whilst it may be legally permissible to dismiss employees with less than two years’ service without following a process, employers should think carefully about other consequences of taking this course of action, including any potential reputational damage and the impact on the morale of other staff.

If you have any questions about any of our ten tips, please get in touch directly with Lucy McLynn and Kyle Hefford.

If you found this content useful, have a listen to our recent Performance Management in a remote working environment webinar, which provides further tips on what effective performance management looks like.