Unfair Dismissal – how does the two year qualifying period work in practice

Last reviewed 19th September 2018

Before an employee can claim they have been “unfairly dismissed”, they normally need to have had at least two years’ service (“continuous employment”) with you.

Calculating continuous employment

Two years’ service is completed the day before the second anniversary of employment. An employee who starts on 1 January will have two years’ service on 31 December of the following year.

Notice periods

In some circumstances, notice is not required to end someone’s employment, but this is rare (e.g. where there is gross misconduct or it becomes illegal to employ them).

When giving notice of dismissal, that notice will run from the following day (unless the contract says something different). Therefore, if an employee is told on 17 December that they are being dismissed, and their contract says they are entitled to two weeks’ notice, it does not run from 17 December, ending on 30 December. Day 1 of the notice period is 18 December and day 14 is 31 December.

The notice of dismissal has to be effectively communicated. If it is done by a letter dated 13 December and put in the post on 13 December, but which is not received until 17 December, day 1 of the notice period would still run from 18 December.

Adding on notice periods after employment ends

In order to avoid someone having two years’ employment, it is possible to end their employment immediately by paying them what they would have received during their notice period (a payment in lieu of notice – “PILON”).

For employees who have worked for at least a month, but under two years, there is a statutory entitlement to notice of at least one week. The contract may provide for a longer period, but one week is the statutory minimum.

Save where immediate termination of employment can be justified, an Employment Tribunal will also add on this statutory period of notice. Therefore, unless no notice was required, an employee who started on 1 January and who is told on 24 December of the following year they are being dismissed, will be able to establish two years’ service, even if a PILON is being made. If they were dismissed on 23 December with a PILON, they would not have had two years’ service – even if their contractual notice period was longer than the statutory minimum of one week.

Other considerations

Where the dismissal is automatically unfair, two years’ service is not normally required. A dismissal may be automatically unfair dismissal where, for example, the reason relates to raising whistleblowing or health and safety concerns, pregnancy, trade union membership, asserting statutory rights etc.

Most other employment law claims, such as unlawful discrimination, do not require two years’ service.

Generally, if you will be dismissing an employee who has less than two years, but you are going to delay communicating it, it is wise to create a prompt record of the decision to dismiss. An employer who can show the decision to dismiss in December was made in October (but not communicated) is better able to defend any claim that the dismissal was for an intervening event (eg. a ‘whistleblowing’ concern raised in November).

This information has been provided by solicitors working for Edward Connor Solicitors. It is designed for the purpose of knowledge sharing only and does not constitute legal advice.