Short service dismissal: What it is and how to get it right

No employer wants to have to dismiss an employee. Decisions like this are never easy, but for several reasons they are often inevitable. And when the worst does come to pass, it's important to know how to dismiss employees in a fair, legal and compliant way.

Short service dismissal is one of the options on the table. If used correctly, it can remove some of the hurdles a standard dismissal requires. But it's important to be aware when short service dismissal rules do and don't apply - and how they are likely to change over the next few years. Here's everything you need to know about short service dismissal.

What is short service dismissal?

What are the upcoming changes to short service dismissal? 

What is a good process for dismissal?

Short term dismissal letter example

What is short service dismissal?

Short service dismissal applies to any employees who are dismissed before they've reached two years of continuous service.

In this timeframe, the employee doesn't have the full rights to make an unfair dismissal claim. This means you can typically speed up the usual dismissal process and forego any redundancy payments. However, this will depend on your company's usual disciplinary procedure and the details in the employee's contract.

Even so, you need to ensure you follow a sound procedure. Failure to do so may put you at risk of an ‘automatically unfair dismissal' claim. It is important to be aware of this, as these protections start as soon as the individual is employed.

Read more: Unfair treatment at work: what can employers do?

What are the upcoming changes to short service dismissal?

Under current proposals in the Government's Employment Rights Bill, short service dismissal is set to be changed quite considerably.

In its pre-election manifesto, the Labour Party promised to make protection from unfair dismissal a day-one right, along with a raft of other benefits including statutory sick pay, parental leave and more. This would have completely abolished short service dismissal, giving all workers the same rights and protections when being made redundant.

Since being elected, the Government has somewhat rowed back on this policy. Now, they've pledged to replace 'day one' protections with a statutory probation period in which a 'lighter touch' approach to dismissal will apply. This will likely be between six and nine months.

It's not currently clear what this lighter touch will entail and how it will compare with current short service dismissal rules. It may be that this probation period will be the same in all but name, only with a shorter timescale. But employers should be aware that changes are coming and keep their eye out for further details.

What are the legal implications of short service dismissal?

In theory, any employee who's worked at the organisation for less than two years will qualify for short service dismissal. In reality, there are several other legal protections that employers have even before they hit two years.

Before engaging in a short service dismissal, it's important to make sure that none of these apply, since these are automatically unfair reasons for dismissal. There are around 60 grounds for which an employee can claim automatic unfair dismissal. Some of the most common include:

1. Family-related

This is related to dismissals regarding maternity or paternity, shared parental leave or adoption leave. If an employee feels they have been dismissed because they've exercised their legal rights to family leave, they can automatically claim unfair dismissal.

2. Refusing to give up certain rights

There are several statutory rights that all employees are entitled to. If they've been dismissed to avoid granting these rights, the employee can automatically claim unfair dismissal. An example of this may be refusing to work over 48 hours a week on average or insisting on being paid the National Minimum Wage.

Read more: What is the National Minimum Wage?

3. Refusal to carry out certain tasks

You cannot dismiss a staff member on short service if they refuse to carry out certain tasks that can put them or others at risk in the workplace. This can involve lifting heavy materials without proper equipment or operating machinery without the correct safety qualifications.

4. Trade union membership

You also cannot dismiss an employee for joining or being affiliated with a trade union. In fact, all employees have the right by UK law to be part of a trade union, leave a trade union or be a member of one or more trade unions. 

5. Dismissal because of a protected characteristic

You should also take care not to dismiss any employees because of the following protected characteristics:

• Age

• Disability

• Sex

• Gender reassignment

• Pregnancy and maternity

• Race

• Sexual orientation

• Religion or belief

• Marriage and civil partnership

It's important to consider these exceptions when dismissing a short-serving employee. With discrimination claims, there is no ceiling on the amount of compensation that can be awarded if a claim is successful. 

Read more: Employment tribunals: How to avoid them - expert insights

What is a good process for dismissal? 

A clear dismissal process is the best way to ensure you treat everybody fairly and avoid falling foul of the law. Here are five steps to include:

1. Identify the reasons for dismissal

First, you should decide on the reasons why the employee is being dismissed. If it's because of wrongdoing or breach of contract, you will need to collect evidence for these actions before taking any decisions. You can suspend the employee, but you must pay them until they're formally dismissed.

Otherwise, you might want to dismiss the employee for financial reasons, or because you no longer need their skills. In this case, you should follow the remaining steps in this section.

2. Draft an initial letter

Next, you should draft an initial letter detailing the reasons for dismissal. If this is for a breach of contract, state the reasons. If it is redundancy for financial reasons, these must also be clearly laid out. 

3. Conduct a meeting 

Arrange a meeting to discuss the dismissal with the employee. You cannot decide on the dismissal until this meeting is held. 

You should also give the employee a reasonable amount of time to prepare, and rearrange the meeting if needed. Employees have a right to trade union representation at these meetings, so it's important you remind them of this right in enough advance of the meeting taking place.

4. Inform the employee of your decision

Once you're able, send your dismissal letter or email to the employee with your decision. You must mention that they can appeal the decision and how they should go about doing so.

5. Give the employee a chance to appeal

Try to have someone who didn't originally dismiss the employee decide the appeal. Also, make sure the employee is aware of their right to be accompanied to meetings.

Read more: The SME redundancy toolkit: Practical support for tough decisions

Short term dismissal letter example

If you're struggling to put together a short term dismissal letter, use our template below. Simply replace the fields in square brackets below and format the letter accordingly.

COMPANY ADDRESS

DATE

EMPLOYEE NAME

EMPLOYEE ADDRESS

Dear [Employee Name]

I am writing to confirm the decision to terminate your employment with [Company Name].

The reasons for this include [Enter reasons].

Your notice period will be [Enter amount of notice]

SELECT AS APPROPRIATE

You are required to work your notice period and your employment will end on 

[Enter date].

Or

You will be [placed on garden leave / suspended] for the duration of your notice period. Your employment will end on [Enter date]. During the [garden leave / suspension] you will be required to comply with the terms applicable to [garden leave / suspension] contained in your contract of employment.

Or

The company has exercised its decision to make payment to you in lieu of notice and therefore your employment will terminate with immediate effect on [Enter date].

Final wages

Your final salary will be paid to you in line with the normal payroll process.

You will also receive payment in lieu of any annual leave which you have accrued but not taken during the current annual leave year up to the date of termination.   

Return of the company property

You are required to return all company property by [Enter date]. This includes, but is not limited to the following:

• [Enter items of company property]

The company reserves the right to make a deduction from any monies, including wages, payment in lieu of notice or annual leave and bonus or commission payable, an amount to cover the cost of any company property lost or damaged.

[Add closing statement]

Yours sincerely

[Enter name]

[Enter job title]

Stay on the right side of the law

Short service dismissal is certainly easier for employers than the full redundancy process. But there are also complications that could land you in an employment tribunal if you're not thorough. Therefore, it's important to take the time, double-check the rules and ask for help if you're in doubt.

Whatever the reasons for dismissing an employee, it's always safer to check with a legal expert first. For full advice and support on all employment law matters, get in touch with one of our Breathe Partners.