Can an employer terminate the contract of an employee in their probationary period if it is facing financial difficulty because of the coronavirus crisis?
An employer that is considering dismissing an employee during their probationary period as a cost-saving measure should first explore alternative options. In particular, it could consider "furloughing" the employee and making use of the Coronavirus Job Retention Scheme to pay 80% of their wages. It may be in the employer's interests to retain the employee during the coronavirus (COVID-19) crisis and avoid having to repeat the recruitment process when the economic situation improves, particularly if the employee is performing well.
If an employer decides to terminate the contract of a probationer for economic reasons during the crisis, it must ensure that the reasons for the dismissal are explained to the employee and properly documented.
Assuming that the employee has less than two years' service, they will not be able to claim unfair dismissal unless the dismissal was for an automatically unfair reason. For example, they could claim that the real reason for the dismissal is that they have asserted a statutory right, such as taking time off for dependants, or made a complaint about health and safety. The employer will also need to be able to show that the dismissal was not discriminatory, as employees do not need two years' service to bring a discrimination claim.
The employer should give the employee their contractual notice or the statutory minimum notice, whichever is greater, or make a payment in lieu of notice. The employer should note that if it makes a payment in lieu of notice where this is not provided for under the contract, it will be in breach of contract and unable to enforce any post-employment restrictive covenants.
If there is a contractual dismissal procedure, the employer must follow this, to avoid a breach of contract claim.