Managing staff in the first two years

Managing staff with less than 2 years of continuous employment service has its own set of complications.

An employee must complete a minimum period of continuous employment with you to be eligible for certain rights and payments.

These include claiming unfair dismissal, statutory redundancy payments, statutory maternity pay, statutory paternity pay, and statutory adoption pay.

However, employees do still afford protection of several statutory rights from day one of their employment which employers should be aware of.

Harriet Gardner, Solicitor within the Employment Law and HR Services Department at Wake Smith Solicitors, looks at the issues.

This article covers:

• Day One Rights
• Future Employment Rights
• ‘Continuous’ Service
• Effective Date of Termination and Service of Notice
• Managing the Probationary Period
• Handling the Probationary Meeting/Dismissal
• Your next move?

Day One Rights

Whilst not an exhaustive list, employee’s benefit from certain statutory rights as soon as their employment commences, for example:

• Pay Rights – to receive at least the national minimum wage (dependant on the employee’s age), an itemised payslip, no unauthorised deductions made from their pay and to be paid for accrued/untaken statutory annual leave on termination of their employment.
• Paid/Unpaid Leave
• Maternity and Paternity Leave – employees are entitled up to 52 weeks maternity leave and paternity leave of up to 2 weeks from the first day of employment. However, statutory maternity pay is not a day one right, and is subject to certain criteria.
• Statutory Sick Pay – employees paying National Insurance contributions are entitled to claim statutory sick pay for up to 28 weeks, after they have been absent from work due to sickness for four days in a row from the beginning of their employment.
• Health, Safety, and Welfare at Work – employees afford protection under the Health and Safety at Work Act 1974.
• Automatic unfair dismissal – employees have a day one right to claim automatic unfair dismissal when dismissed on a number of grounds including if the dismissal is connected to pregnancy, family leave, acting as an employee or trade union representative, being a part-time or fixed-term employee and whistleblowing.
• The right not to be discriminated against – employees have the right from application stage not to be discriminated against. An employee should not be discriminated against because of a ‘protected characteristic’; this is defined as age, sex, sexual orientation, religion or belief, race, disability, marriage and civil partnership, and/or gender reassignment.

It is therefore important that you are aware of the above rights immediately from the commencement of an employee’s employment.

Future Employment Rights

As the employee’s employment continues, their statutory rights extend further and therefore the employer has further obligations to comply with.

At 26 weeks of continuous employment, an employee is entitled to make a request for flexible working (although does not necessarily have to be approved by the employer). Additionally, an employee will also become eligible to claim statutory maternity / paternity pay.

After 1 year of continuous employment, an employee becomes eligible (unless specifically excluded by their contract of employment), to take up to 18 weeks of parental (unpaid) leave for each child. This is separate to the usual annual leave entitlement and must be used in blocks of weeks at a maximum of four weeks a year for each child.

At the second anniversary of continuous employment (and beyond), an employee becomes entitled to further statutory rights. These being the statutory protection from unfair dismissal, the right to a statutory redundancy payment and the right of the employee to request a written reason for dismissal.

‘Continuous’ Service

The concept of ‘Continuity’ of employment should also be carefully considered by any employer to ascertain when an employee affords the statutory protection from unfair dismissal and the right to a statutory redundancy payment.

Continuity generally commences when an employee’s contract starts (even if the employee is not at work that day) and ends when it terminates, as long as it has not been broken in any other way. 

However, it will usually be broken by, amongst other events, a break of one clear week (measured from Sunday to Saturday) between two contracts of employment, unless certain exceptions apply.

An employee’s continuity can also be preserved if they stop working for one employer and immediately commence work for an associated employer where the periods of their employment with both the original employer and the associated employer will count towards the continuous employment period. An example of this being when an employee transfers from one group company to another within the same corporate group.

When considering an employee’s length of service for the purposes of an unfair dismissal claim, it is important that the statutory notice period is also accounted for. For example, if you decide to dismiss an employee in their last week of their 2-year anniversary, and you assume that they have not completed 2 years service, you could leave yourself open to risk. From a tribunal claim perspective the statutory notice period will count towards the employee’s continuous service period, even on occasion, if an early leave date is agreed and/or the employee is paid in lieu of notice.

A common mistake is assuming that 2 years’ service means the literal full 2 years.

Effective Date of Termination and Service of Notice

The effective date of termination (‘EDT’) is also key when determining if the employee meets the two years’ service requirement – also known as the date of dismissal.

When serving notice consideration should be given to the statutory and contractual position. Not only from the length of notice perspective but also whether you are entitled in accordance with the contract to pay in lieu of notice, as this impacts the EDT.

Ensuring that your contracts include a pay in lieu of notice clause means you can terminate the employment immediately and pay the employee their notice in lieu as a lump sum. As mentioned above, it is worth noting that statutory notice will always be added on to the length of service for continuous service purposes and even if you try and agree with the employee that they waive notice, it is likely that the statutory notice will still extend the EDT  (Secretary of State for Employment v Staffordshire County Council).

Alternatively, you may decide not to end the employment sooner if time is on your side and place an employee on garden leave. However, in this situation the employee’s employment will end on the date the notice expires and not when they were placed on garden leave which could, again, risk taking the employee to two years’ service or over.

In addition to the above, how notice is served and when it is deemed served/effective is important. If you post the dismissal notice then it is deemed effective from the point it is received by the employee, not the date of the dismissal letter or when it was posted. This is highly important when establishing the employees two-year service requirement, as often it is assumed that the employee is dismissed from the date of the dismissal letter.

It is therefore recommended that you include a contractual provision within your contracts of employment of when notice is deemed served i.e. when an email is sent.

Managing the Probationary Period

The purpose of a probationary period is to provide a suitable amount of time in which you can assess the employee and their capabilities, and the employee can assess if the role is right for them. Whilst probationary periods are advisable, they achieve very little if they are not managed effectively.

The length of probationary periods often depends on the nature of the job and how long it will take the employer to assess the employee’s performance for the purposes of confirming continued employment. This is usually 3 or 6 months.

An employee’s contract can provide that, during the probationary period, their employment can be terminated on shorter notice (subject to the minimum statutory notice) than the notice which they will be entitled to once the probationary period is completed successfully, and they are confirmed in employment.

Employers often don’t manage probationary periods correctly, for example, a manager may identify at an early stage that a new employee is not meeting the required standards but do nothing to bring this to the employee’s attention because of a reluctance to have a difficult conversation. Consequently, an employee may be surprised to hear, at the end of the probationary period, that they have not passed (having been given no support to meet the required standards and no chance to improve).

In practice, employers should be clear about the approach that they intend to follow and should gather information about the employee’s performance throughout. To avoid any uncertainty or confusion, it is recommended that employers arrange meetings at stages throughout the employee’s probationary period (i.e., fortnightly / monthly).

A record should be kept of the feedback that is given to the employee, a copy kept on the employee’s file and a copy given to the employee. The outcome of any meetings, including any extension of the probationary period (where applicable) and any steps required of the employee going forward, should be confirmed in writing.

You should not wait until the end of the probationary period to identify or address underperformance.

Where considered necessary, and only if you have a contractual right to extend the probationary period, you can notify the employee that their probation is being extended before the original probationary period expires.

Handling the Probationary Meeting/Dismissal

At the end of an employee’s probationary period, it is recommended that you invite the employee to a formal review meeting, and, if there are any concerns or performance/conduct issues, you should attach these and the relevant evidence to the formal invitation letter. You should also make clear to the employee of the possible outcomes of the meeting (i.e., it could result in their probation being extended or dismissal).

It is best practice to advise the employee who will be conducting the meeting/note taking and allow the employee the right to be accompanied to the meeting by a work colleague or a trade union official.

Within the meeting, employers should explain the purpose of the meeting and the concerns they have about the employee’s performance. The employee should then be given the opportunity to provide a response to the concerns and any relevant explanations. It will then be for the chair to consider the employee’s explanations and consider the outcome accordingly (although this does not necessarily have to be within the meeting itself).

You should keep in mind the risk of claims, such as discrimination or automatic unfair dismissal claims, that can be brought from the outset of the employment relationship when managing the probationary period and any extensions / dismissals.

Your next move?

If you require any advice on the matters discussed in this article, please give our friendly employment team a call on 0114 266 6660.

This advice article follows an Employment webinar on the topic. If you would like to sign up for the webinars programme please click here

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