Legal Framework Behind the 103-Week Milestone
The Statutory Threshold
Since 6 April 2012, UK employees must work continuously for two years (minus one week) before they acquire full employment rights. This is known as the “qualifying period” or “two-year rule”.
The 2 year mark in an employment contract carries major implications for employee statutory rights. After completing two years of continuous service, (minus one week), employees gain protection against unfair dismissal and the ability to bring other claims before an Employment Tribunal.
When people talk about having “2 years minimum employment” before being able to make a claim, the reality therefore is that it can be 1 week less. This is because employees are entitled to the minimum statutory notice period of 1 week, and this week carries the employee over to the 2 years. It is critical to note that the contractual notice does not carry the employe over- only the statutory 1 week period.
If the employer opts to pay the employee in lieu of notice and gives that statutory notice earlier than 23 months and 3 weeks, with the last day of employment falling within the 23 months and 3 week window, the employee would not be afforded unfair dismissal protection. If that statutory notice takes the employee over the 2 years, however, then the employee will qualify in being able to make a claim.
Evolution of Legal Reforms: Unraveling the Origins of Change
In the tumultuous economic landscape of 2012, the global economy faced unprecedented challenges. Amidst the throes of a worldwide recession, the United Kingdom found itself deeply entrenched, grappling with soaring unemployment rates that peaked at 8.4% in late 2011. In response to the pressing need for economic recovery, the government sought to stimulate recruitment by introducing greater flexibility for employers.
To achieve this objective, a pivotal change was enacted in employment law. The requirement for employees to accrue 2 years of continuous service, as opposed to the previous 1 year threshold, was implemented. This alteration, strategically designed by the government, aimed to grant employers increased flexibility, particularly in the early stages of an employee's tenure.
By extending the window during which an employee could be dismissed without triggering full employment rights, the intention was to mitigate hesitancy among employers to engage in hiring, fostering a more dynamic and responsive job market.
In the current landscape, defined by a pressing cost-of-living crisis, escalating inflation & international conflict and recurrent adjustments to the BoE (Bank of England) base rate, employers and employees alike grapple with the complexities of economic adversity. Regrettably, these challenges often compel organisations to tighten their fiscal belts, a circumstance that may, inevitably, precipitate job losses.
Within this unfortunate scenario, certain employers perceive employees with less than two years of service as the proverbial 'low-hanging fruit' when contemplating necessary workforce reductions. This perspective is rooted in the legal reality that individuals with less than two years of continuous employment lack the safeguard against unfair dismissal.
And to make things worse, some unscrupulous employers exploit this legal threshold, strategically timing dismissals to avoid repercussions for their lack of compliance with ACAS Code of Practice and local employment law. This article explores this troubling phenomenon and its impact, while outlining employee protections.
Legal Perspectives on Tactical Pre-Emptive Dismissals at 103 Weeks Loophole
Crossing the 103-week threshold grants employees greater power and security while presenting new burdens for organisations. This produces perverse incentives for unethical employers. Rather than invest in fair and compliant workplaces, some employers instead exploit legal loopholes. Aware of the protections bestowed after 2 years, they preemptively terminate employees beforehand through "tactical dismissals." This allows them to sidestep the slew of legal obligations and litigation risks that would soon apply. Unfortunately, without robust evidence, relatively little recourse exists for these strategically-timed dismissals.
While judges frown upon the practice, tactical dismissals occurring before an employee passes 2 years of service generally do comply with the letter of the law. Employment lawyers advise that absent smoking gun evidence of discrimination, retaliation or other violations, relatively little legal recourse exists. Still, documenting all interactions with the employer is vital for building the strongest case possible, even if one in the public interest - uncovering an en-masse unlawful business practice of denying employees their statutory right by disallowing them the completion of two years of continuous service.
Employee Rights and Potential Recourse
Yet while this qualifying period fuels opportunism on one side, it also grants power on the other. Employees dismissed around the cusp of two years service possess more leverage than they may realise. Various legal and tactical recourses exist to pursue fair treatment. Protected employees can bring legal action if unfairly dismissed, passed up for promotion, bullied, retaliated against and more.
If dismissed around the 2 year mark, employees should immediately consult an employment expert to explore and understand their rights. Careful examination may reveal flaws in process, unfair practice issues, or other actionable concerns.
There could be five statutory grounds for a standard fair dismissal, delineated under the Employment Rights Act 1996 (ERA). These encompass:
- Capability.
- Conduct.
- Redundancy.
- Breach of a legal obligation.
- Some other substantial reason (SOSR).
The term SOSR encompasses a range of exceptions, providing flexibility for employers to fairly dismiss an individual when no other clear reason aligns with the established categories. For instance, it might apply when dismissing an employee after deciding not to renew their fixed-term contract.
Crucially, when an employer opts not to continue an employee's contract, they must demonstrate a fair reason. If the rationale doesn't neatly fit into the aforementioned five categories, it could potentially lead to a situation where the dismissal is deemed unfair.
In an unfair dismissal claim, it is for the employee to demonstrate that they were unfairly dismissed. This can either be a straightforward express dismissal (e.g. “You’re fired!”), the expiry of a fixed-term contract without it being renewed by the employer, or a constructive dismissal (where the employee resigns in response to a serious breach of contract by the employer). The Employment Tribunal will uphold the claim unless the employer can show either of the 5 acceptable reasons for the dismissal above.
If one of these reasons is established, the Employment Tribunal goes on to determine whether the dismissal was fair or unfair. The key question is whether or not the employer acted reasonably in dismissing the employee for the reason in question.
Employment Tribunals look carefully at the procedure followed by an employer when deciding whether a dismissal is fair or unfair. The detail of the expected procedure depends on the type of reason for dismissal. The basic principle, however, is that an employee should as a minimum have a meeting with the employer and a chance to put their case before the employer makes a final decision. The Acas Code of Practice on disciplinary and grievance procedures sets out the minimum expected steps for a disciplinary dismissal and a failure to follow this Code will mean that the dismissal is unfair.
Day One Rights: Automatically Unfair Dismissal Safeguards
A distinctive feature of UK employment law is the concept of automatically unfair dismissal, applicable from day one of employment. Certain categories of dismissal are automatically unfair, for example:
- dismissal on grounds of an employee’s trade union membership or activities
- health and safety-related dismissals
- dismissal for making a protected disclosure (whistleblowing)
- dismissal for asserting a statutory right
- pregnancy or maternity-related dismissals
Cases related to flexible working applications, National Minimum Wage issues, and the right to be accompanied to disciplinary or certain grievance hearings fall within this category. Additionally, dismissals connected to spent convictions and Transfer of Undertakings (TUPE) regulations are considered automatically unfair, with no requirement for a specific length of service.
The Equality Act 2010 provides robust protection against discrimination from the moment an employer advertises a vacancy, let alone the time the employee joins an organisation. Employees possessing any of the nine protected characteristics, including age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation, are safeguarded. Instances where dismissal is linked to pregnancy or maternity underscore the immediate intersection of automatically unfair dismissal and discrimination.
Whistleblowing:
Whistleblowing, marked by making a protected disclosure, introduces a unique layer of protection on day one of employment. Dismissing an employee for whistleblowing is not only ethically questionable but also legally prohibited. Unlike claims for unfair dismissal, whistleblowing claims do not hinge on a minimum length of service. Compensation for a successful whistleblowing claim is uncapped, with potential awards for injury to feelings.
Breach of Contract: The right to bring a breach of contract claim exists from the inception of a contract, irrespective of an employee's tenure. Breach of contract claims, often centred around unpaid wages such as notice pay, or unlawful deductions from pay can be initiated without a specific length of service.
Employees should also be aware of whether the Staff Handbook forms part of their contract, as deviations from relevant policies could lead to a breach of contract claim.
Compensation
In the event of a successful claim for unfair dismissal, the Employment Tribunal may order reinstatement or re-engagement of the employee if this is practicable in the circumstances, but this is extremely rare in practice. In most cases, the remedy awarded is compensation. This comprises of:
- a basic award (equivalent to a statutory redundancy payment), and
- a compensatory award.
Working out the basic award
The amount an employee can get for the basic award depends on:
- length of continuous with the same employer at the time of dismissal
- employee's age at the time of dismissal
- employee gross weekly pay (before tax and national insurance are deducted)
There’s a maximum amount for a week's pay. For dismissals on or after 6 April 2023, the amount is £643. If the employee's gross weekly pay is more than £643, only up to £643 a week can be claimed.
Employees can calculate their basic award on GOV.UK - it’s the same as statutory redundancy pay.
For employees who were made redundant and were paid statutory redundancy pay, there won't usually be a basic award - unless the tribunal decides redundancy wasn’t the real reason the employee lost their job.
Working out the employee's compensatory award
The employee needs to calculate their weekly or monthly income after tax and national insurance, considering regular overtime and bonuses, depending on the frequency of their pay.
In addition to the regular income, the employee should account for other contractual benefits received from the employer. This includes pension contributions, accommodation, use of a company car, and company medical insurance. The employee should quantify these benefits to establish their overall losses.
The losses up to the calculated date are termed 'past losses,' while the anticipated losses until securing a new job are termed 'future losses.' For employees with two or more years of service, there's an additional claim for 'compensation for loss of statutory rights,' ranging between £350 and £500.
To determine the compensation duration, the employee multiplies the calculated weekly or monthly losses by the anticipated duration of unemployment. The upper limit on the compensatory award is the lower of £105,707 (from 6 April 2023) or 52 weeks’ pay. The compensatory award is what the tribunal considers “just and equitable” in all the circumstances taking account of the employee’s losses since the dismissal and looking to the future. The employee is expected to mitigate their loss by making reasonable efforts to find a new job.
If the employee has already found a new job, compensation calculation involves multiplying the weekly or monthly losses by the duration of unemployment. If the new job pays less, the employee can claim the difference. For temporary jobs, compensation covers the time spent looking for the job and the period after leaving the job, with the tribunal deciding the duration.
For those still seeking employment, the employee multiplies the weekly or monthly losses by the estimated duration of job search. The tribunal expects evidence of reasonable job-seeking efforts, including a documented list of activities and job applications.
The tribunal considers various factors to determine the likely duration of unemployment. Positive indicators, such as a history of easily finding jobs, good references and accessible transport options, may suggest a shorter period. Conversely, factors like ill health or limited job opportunities for the employee's skill set may lead to a longer compensation period.
Compensation can be increased by the tribunal if the employer didn't follow the ACAS Code of Practice on disciplinary and grievance procedures. Additionally, an extra 2 or 4 weeks' pay may be awarded if the employer didn't provide a written statement of the employee's terms and conditions of employment.
Conversely, the tribunal might reduce compensation if the employee is partly to blame for the dismissal, the employer didn't follow a fair procedure but could have, the employee hasn't made sufficient efforts to find a new job, or the employee failed to attend disciplinary or appeal meetings without a valid reason.Or, if the dismissal is unfair because the employer adopted an unfair procedure, the Employment Tribunal may reduce the award if the employee may have been dismissed in any event even if proper procedures had been followed.
Impact on Employees and the Employment Landscape
When employers orchestrate dismissals deliberately timed to undercut employees’ legal protections, the impacts on those employees and the workplace culture more broadly can be wide-ranging and severe. On an individual level, suddenly losing one's income source is distressing regardless of job tenure or performance context. However, the sense that statutory rights were unfairly manipulated provokes unique financial, emotional and psychological harms for impacted staff.
Aside from direct lost wages, dismissed employees are robbed of accrued leave, vesting job benefits and progress toward milestone service markers that would have conveyed additional rights. The financial setbacks multiply—affecting not just short-term budgeting but longer-term savings and retirement planning. Additionally, abrupt income loss can catalyse family stress when positions are filled by primary breadwinners. The economic fallout expands across households.
Beyond finances, these tactical dismissals can inflict heavy emotional tolls. Employees rightfully feel exploited, deepening cynicism toward employer relations. Lingering resentment over perceived strategic timing can haunt job searches, undermining motivation. Such manipulation also erodes staff trust in leadership, devastating work culture. Surviving team members may withhold their full talents and engagement, believing employers will only dispose of them eventually in similar fashion.
While laws permitting dismissals under certain tenure thresholds aim to balance business flexibility and worker protections, when done in bad faith, hamper employee loyalty. The direct hardships dismissed staff face from lost income and benefits, to severed advancement, tainted morale and family sacrifices add up. But when paired with a sense the system was deliberately maneuvered against them through perfectly legal means, the distress compounds exponentially. Recovering from such blows, economic and emotional, presents a longer journey for impacted workers.
Though employers may rationalise tactical terminations as shrewd business moves, the deeper wounds such actions inflict require consideration in ethical matrices as well. Strictly legal does not always equate to morally right. Those distinctions in rationale and repercussions merit more nuanced evaluation.
Mobilising Media & Policymakers - Advocating for Legislative Changes
Employees facing tactical dismissal might consider engaging external channels like press and political contacts to spotlight and question cases of dismissal timed suspiciously close to the 103 week mark. Especially when multiple employees face concurrent exits, public scrutiny can prompt customer backlash and brand damage for employers.
Policymakers take interest when trends arise too - floods of reports on such terminations build rationale for closing qualifying period loopholes. Workers personalising cases through media and legislators carries risks but generates essential awareness that may lead to positive change for all.
While tactical dismissals may not clearly violate legislation, the practice subverts the spirit of employee protections. Closing this loophole may well require regulatory and statutory reforms, including:
- Reducing the qualification period for unfair dismissal rights
- Expanding just cause requirements before dismissal
- Requiring enhanced severance pay under certain dismissal circumstances
The 103-week mark represents a watershed moment where employees gain significantly expanded UK workplace rights. Unfortunately, some employers resort to tactical dismissals to deny these rights, devastate workers and erode trust in the employment system. However awareness of this issue and options for recourse can help vulnerable employees navigate potential pitfalls around this precarious threshold while spurring positive reforms. Collectively, employees must unite their voices against exploitative policies and for more equitable employment regulations.
In such challenging times, Your HR Friend extends a steadfast hand as your confidante and ally.
Should you find yourself on the precipice of the 103-week mark, facing the disconcerting prospect of a tactical dismissal, or if you have heard down the grapevine that your organisation frequently employs such unfair tactical dismissals, we implore you to connect with us. We stands ready to offer bespoke counsel, guiding you on the meticulous documentation and construction of a compelling case. With our tailored coaching, you can navigate the intricate nuances of the situation, secure in the knowledge that your rights will be safeguarded at every turn.
Solitude need not be your companion in this journey. Allow us to redress the balance, to be the force that levels the playing field on your behalf. We understand the profound importance of feeling respected and valued in the workplace, and we are steadfast in our commitment to making it a reality for you.
Take that crucial first step by initiating contact with Your HR Friend – your unwavering companion in the labyrinth of workplace intricacies. Do not miss out on our free introductory consultation, our regular discount offers or contemplate the unparalleled value of our one-year subscription, ensuring continual support and empowerment.
So You Thought You'd Reach The Two Year Milestone ... Bam! It's As If It's Been Scripted