Employment Tribunal considers dismissal on the cusp of two-year service period

If an employee is dismissed for gross misconduct when they have been employed for just short of two years’ service, can they add on the statutory minimum notice period so they can qualify to bring an unfair dismissal claim?

In a recent case, the Employment Appeal Tribunal (EAT) ruled that the deeming provision contained within s86 of the Employment Rights Act 1996 cannot be relied upon in order to obtain the two years’ qualifying service, where there is a genuine entitlement to summarily dismiss on gross misconduct grounds.

The background

In Lancaster & Duke Limited v Wileman, the Claimant, Ms Wileman, was employed by the respondent as a recruitment consultant. Just days before her two-year “work anniversary” (and therefore the date on which she would have the necessary length of employment to bring an unfair dismissal claim) she was summarily dismissed.

The procedural fairness of this dismissal was considered as there had been no consultation with Ms Wileman prior to her dismissal, she had not been given the chance to explain her behaviour, nor was she provided with any opportunity to appeal the decision.

The dismissal arose because of a fractious relationship between the Claimant and one of the Respondent’s directors, and as a result of her conduct which was alleged to be ‘offensive’. Following the termination of her employment on these grounds, the Claimant lodged a claim for unfair dismissal.

The Respondent argued that the claim should automatically fail as the Claimant did not have the required two years’ service. The Claimant challenged this on the basis that the statutory minimum notice period of one week should be applied to the duration of her employment which would therefore take her ‘over the line’ and allow an unfair dismissal claim to be brought.

The law

With certain limited exceptions, an employee generally needs to have two years’ of continuous, unbroken service to bring a claim of unfair dismissal against his or her employer.

Section 86 of the Employment Rights Act 1996 (ERA) lays down the minimum periods of notice required to terminate a contract of employment. Notwithstanding these minimum periods, Section 86(6) then provides that an employment contract remains terminable without notice on the grounds of conduct.

In certain circumstances, an employee dismissed with no notice or less than the statutory minimum notice, can ‘artificially’ extend the effective date of termination (EDT) to the date on which the proper statutory notice would have expired under Section 97(2) of the ERA. This, quite clearly could prove to be of benefit to employees who are dismissed within a week of their two-year anniversary – at which point they gain statutory unfair dismissal rights. The legislation on this point is clear. What is more ambiguous however is the situation where the employee is summarily dismissed. In such circumstances it was uncertain whether or not the provisions of Section 97(2) could be invoked in order for an employee to gain the two years’ continuous service required.

The decision

In the first instance, the Employment Tribunal agreed with Ms Wileman and her unfair dismissal complaint was upheld. It held that as Ms Wileman’s employment was terminated less than a week before she reached two years’ continuous service, the legislation meant that the week that represented her statutory notice period required to be added on to the calculation of length of service. This gave Ms Wileman more than two years’ service, and her dismissal was unfair.

The EAT allowed the appeal by the Respondent. In reaching this conclusion the EAT noted that whilst Section 86(1) and Section 86(2) provide the minimum notice periods for termination of an employee’s employment, Section 86(6) ERA 1996 conditions that any such notice period can be treated as being void by either party based on the conduct of the other.

Further, the EAT considered that Section 97(2), which allows the minimum notice period to be applied to reflect the effective date of termination, takes the whole of Section 86 into account when calculating this date, including Section 86(6) relating to the conduct of the parties.

If the Claimant’s summary dismissal had arisen out of her conduct being such that the Respondent could dismiss without notice, the EAT held that she was not then entitled to build up her length of continuous service to be two years or more and, therefore could not bring an unfair dismissal claim.

The EAT therefore allowed the appeal and remitted the case to the Tribunal to consider whether Ms Wileman had been guilty of gross misconduct (which had not been determined in the Tribunal).

Comment

The implications of this decision are not as wide-ranging as they may have initially seemed to be. Employers cannot simply label the reason for dismissal as ‘gross misconduct’ to circumvent the application of the statutory extension. The Tribunals will first look to establish whether or not the employer was entitled to dismiss without notice before then attempting to establish whether or not the EDT can be extended. Therefore, a Tribunal will still likely require to hear all the evidence it would hear for an unfair dismissal claim.

Whilst the application of this case will be limited to very specific factual situations, being (i) when an employee has between one year, 51 weeks’ service and two years’ service; and (ii) only when they are dismissed for alleged gross misconduct, it is an interesting interpretation of the statutory provisions and may be useful for employers to remember this exception.

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• Scott Milligan | 0141 227 9408