The amount of ‘continuous employment’ needed to qualify for the right to not be unfairly dismissed has often been one of the first elements of employment law which an incoming government changes upon being re-elected. Those familiar with employment law will recognise the somewhat predictable historical pattern of incoming Labour party governments lowering the time of continuous employment needed and incoming Conservative party governments conversely raising the time needed. The Labour party have recently released a ‘working paper’ stating that if they were to win the next general election in 2024, they would abolish the qualifying time period entirely from the 2-year period currently operating.
With this potential change only being hypothetical, it is a good time to revisit what the current law is regarding when an employee acquires the right to not be unfairly dismissed, as well as dismissals which are automatically unfair, no matter the time served by the employee.
What constitutes 2 years of continuous employment?
Since 2010 under the Conservative coalition government, an employee requires 2 years of continuous employment (s.108 ERA 1996) before they acquire the right to not be unfairly dismissed. Firstly, the person has to be an employee within the definition of s.230 of the Employment Rights Act as opposed to a worker (details of the difference can be found at: https://www.acas.org.uk/checking-your-employment-rights).
The next requirement is 2 years of ‘continuous employment’ from the date when the employee formally starts work which, on the surface, is quite an ambiguous term. In general terms, continuous employment means working for the same employer without a break as long as the employee is under an employment contract. This includes where there has been a transfer of undertakings or there has been a move for the employee between associated employers.
Measuring the 2 years of continuous service should be in line with s. 212 (1) of the ERA 1996. S.212 (1) says that any week where the employee’s relations with an employer are governed by an employment contract count towards the 2 years. This also includes part-time work too. Absence from work due to reasons such as holidays, sickness, maternity and/or paternity leave, adoption leave will not break continuous employment as long as the employment contract continues throughout these events. One notable exception is a week where an employee was on strike, which does not count as a week contributing to continuous employment but it does not ‘reset the clock’ either, it is just not counted (s.216 ERA 1996).
Automatically unfair dismissals where the 2-year period does not apply
There are approximately 60 ‘day 1 rights’ which employees acquire from the start of their employment and are automatically unfair reasons to dismiss. A dismissal on grounds related
to trade union membership is automatically unfair, for example. The ERA 1996 s.180(3) lists a number of further automatically unfair reasons for dismissal which are exceptions to the 2-year rule including dismissal related to pregnancy, for maternity leave, and for enforcing the right to be paid the National Minimum Wage, to name but a few. Employers should also be wary that claims for discrimination, whistleblowing, and breach of contract could be made before 2 years of continuous employment too.
What does this mean in practical terms?
Essentially this means that employers are able to dismiss employees with less than 2 years’ service without a ‘fair’ reason for the dismissal and without a positive obligation to conduct a fair disciplinary procedure.
However, there are inherent risks if an employer decides not to conduct a fair disciplinary procedure or at the very least a meeting prior to dismissal, even for employees with less than 2 years’ service. A fair procedure has the obvious benefit of letting the employer inform the employee of their position in a controlled manner but also to afford the employee a chance to respond. For an employer, this may alert them to any potential hurdles in the form of the ‘day 1 rights’ mentioned earlier in this article or any potential discrimination claim. It also helps to show current employees that the employer is willing to hear out concerns and maintain a reputation that they care for their employees.
In any event, the employer still needs to abide by contractual or statutory notice periods to avoid wrongful dismissal claims (unless there is clear evidence of a gross misconduct issue).
Don’t forget, this advice is general in nature and will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, RMI template documents, including a disciplinary process, as well as a number of industry experts for your assistance.
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Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.
