Unfair dismissal qualifying period: overview
Sarah-Marie Williams of Clyde & Co LLP begins a series of articles on the unfair dismissal qualifying period with an overview that looks at the rules around continuous service for unfair dismissal and the effect of the recent change in the unfair dismissal qualifying period.
Introduction
The right not to be unfairly dismissed under part 10 of the Employment Rights Act 1996 is a key employment law right. Employees who have been dismissed can, subject to qualifying conditions, claim in an employment tribunal that their dismissal was unfair. If the tribunal finds in an employee's favour, it may award him or her compensation, reinstatement or re-engagement as a remedy. However, the rules concerning who can bring a claim of unfair dismissal have recently changed.
Under s.108 of the Act, employees must have a minimum qualifying period of continuous service with their employer at the effective date of termination to be able to claim unfair dismissal. Prior to 1999, employees needed two years' service. In 1999, the Labour Government reduced the qualifying period to one year. As part of its initiative to improve business confidence and boost economic growth, the current Government has increased the qualifying period to two years. The Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 (SI 2012/989), which came into force on 6 April 2012, amended s.108 to effect this change. The order also increased, from one to two years, the qualifying period (in s.92(3) of the Act) for the right to receive, on request, a written statement of reasons for dismissal.
Increase in qualifying period not retrospective
The increase in the unfair dismissal qualifying period is not retrospective. The new requirement to have two years' service before qualifying for the right to bring a claim applies only to employees whose employment with their employer commenced on or after 6 April 2012. The one-year continuous service qualifying period continues to apply to employees whose period of service began prior to 6 April 2012. For example, an employee who started work with a new employer on 7 April 2012 and is subsequently dismissed will need two years' service to be able to claim that the dismissal was unfair. He or she will be precluded from claiming if dismissed prior to achieving two years' service. However, an employee who started work with a new employer on 5 April 2012 will not be caught by the change in the legislation. If the employee is dismissed after acquiring one year's continuous service, he or she will be able to lodge a claim regardless of the change in the rules.
Continuity
To establish whether or not an employee is able to claim unfair dismissal, it is necessary to establish his or her continuity of service. Continuous service is measured by the period of time that the employee has worked for the employer, or an associated employer, at the effective date of termination, without a break (subject to some exceptions - see below). An employee's period of continuous service is determined by the statutory rules in part 14, chapter 1 of the Employment Rights Act 1996.
Weeks that counts towards continuous service are weeks during the whole or part of which an employee's relations with his or her employer are governed by a contract of employment. A "week" is a period of seven consecutive days beginning on a Sunday and ending at midnight on the following Saturday.
Successive contracts with the same employer will preserve continuity. Continuity is also preserved if the employment transfers as a result of a TUPE transfer.
An employee acquires one or two years' service on the day before the first or second anniversary (as applicable) of joining the employer. In the example above, the employee who joined the employer on 5 April 2012 will need to remain in employment until 4 April 2013 (not 5 April 2013) to be able to bring a claim. The employee who started employment on 7 April 2012 will need to remain employed until 6 April 2014 (not 7 April 2014) to have the requisite service to qualify.
If an employer does not give an employee statutory notice (see Statutory minimum notice to be given to employees in the XpertHR quick reference section for more details), his or her effective date of termination is extended to the date that it would have been, had the employer given statutory notice. As a result, an employer cannot avoid the employee acquiring unfair dismissal rights by failing to give statutory notice.
Breaks that count towards continuity
Some breaks in service count towards an employee's continuous service. These include breaks in service where:
- the employee is unable to work due to sickness or injury (for breaks of no more than 26 weeks);
- there is a temporary cessation of work (for example, where the work is seasonal); and
- by arrangement or custom the employee is regarded as continuing in the employer's employment.
Continuity is also preserved during periods of maternity, paternity, adoption and parental leave.
Potential impact of increase in qualifying period
There has been much speculation about the potential impact of the increase in the unfair dismissal qualifying period. Given that fewer employees will be able to claim that their dismissal is unfair, some commentators are of the view that there may be an increase in the number of claims brought for reasons that do not require a qualifying period, for example claims under the Equality Act 2010. There may also be an increase in claims that the dismissal is for one of the reasons that are automatically unfair that do not require a period of qualifying service (for example dismissals for trade union or health and safety reasons or for asserting a statutory right). These reasons will be discussed in more detail in the next article in this series.
Next week's article will look at the reasons for dismissal that do not require employees to have a qualifying period of service to be able to bring an unfair dismissal claim and will be published on 14 May.
Sarah-Marie Williams (Sarah-Marie.Williams@clydeco.com) is a legal director at Clyde & Co LLP.
Further information on Clyde & Co LLP can be accessed at www.clydeco.com.