Employment Rights Act 1996, section 138

No dismissal in cases of renewal of contract or re-engagement

Part XI Redundancy payments etc.

(1)Where—

(a)an employee’s contract of employment is renewed, or he is re-engaged under a new contract of employment in pursuance of an offer (whether in writing or not) made before the end of his employment under the previous contract, and

(b)the renewal or re-engagement takes effect either immediately on, or after an interval of not more than four weeks after, the end of that employment,

the employee shall not be regarded for the purposes of this Part as dismissed by his employer by reason of the ending of his employment under the previous contract.

(2)Subsection (1) does not apply if—

(a)the provisions of the contract as renewed, or of the new contract, as to—

(i)the capacity and place in which the employee is employed, and

(ii)the other terms and conditions of his employment,

differ (wholly or in part) from the corresponding provisions of the previous contract, and

(b)during the period specified in subsection (3)—

(i)the employee (for whatever reason) terminates the renewed or new contract, or gives notice to terminate it and it is in consequence terminated, or

(ii)the employer, for a reason connected with or arising out of any difference between the renewed or new contract and the previous contract, terminates the renewed or new contract, or gives notice to terminate it and it is in consequence terminated.

(3)The period referred to in subsection (2)(b) is the period—

(a)beginning at the end of the employee’s employment under the previous contract, and

(b)ending with—

(i)the period of four weeks beginning with the date on which the employee starts work under the renewed or new contract, or

(ii)such longer period as may be agreed in accordance with subsection (6) for the purpose of retraining the employee for employment under that contract;

and is in this Part referred to as the “trial period”.

(4)Where subsection (2) applies, for the purposes of this Part—

(a)the employee shall be regarded as dismissed on the date on which his employment under the previous contract (or, if there has been more than one trial period, the original contract) ended, and

(b)the reason for the dismissal shall be taken to be the reason for which the employee was then dismissed, or would have been dismissed had the offer (or original offer) of renewed or new employment not been made, or the reason which resulted in that offer being made.

(5)Subsection (2) does not apply if the employee’s contract of employment is again renewed, or he is again re-engaged under a new contract of employment, in circumstances such that subsection (1) again applies.

(6)For the purposes of subsection (3)(b)(ii) a period of retraining is agreed in accordance with this subsection only if the agreement—

(a)is made between the employer and the employee or his representative before the employee starts work under the contract as renewed, or the new contract,

(b)is in writing,

(c)specifies the date on which the period of retraining ends, and

(d)specifies the terms and conditions of employment which will apply in the employee’s case after the end of that period.

Definitions used in section 138 10

employee

(1) In this Act “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.

Defined in s.230(1) · see it in the full Act
contract of employment

(2) In this Act “contract of employment” means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.

Defined in s.230(2) · see it in the full Act
employment

(5) In this Act “employment”—

(a)in relation to an employee, means (except for the purposes of section 171) employment under a contract of employment, and

(b)in relation to a worker, means employment under his contract;

Defined in s.230(5) · see it in the full Act

(6) This section has effect subject to sections 43K , 47B(3) and 49B(10) ; and for the purposes of Part XIII so far as relating to Part IVA or section 47B, “worker”, “worker’s contract” and, in relation to a worker, “employer”, “employment” and “employed” have the extended meaning given by section 43K.

Defined in s.230(6) · see it in the full Act
renewal

“renewal” includes extension, and any reference to renewing a contract or a fixed term shall be construed accordingly,

Defined in s.235(1) · see it in the full Act
week

“week”—

(a)

in Chapter I of this Part means a week ending with Saturday, and

(b)

otherwise, except in sections 27C, 75F, 75H, 80A, 80B , 80EA , 80EF , 80J and 86 and paragraph 11 of Schedule A1 , means, in relation to an employee whose remuneration is calculated weekly by a week ending with a day other than Saturday, a week ending with that other day and, in relation to any other employee, a week ending with Saturday.

Defined in s.235(1) · see it in the full Act
dismissed

“dismissal” and “dismissed” shall be construed in accordance with sections 136 to 138,

Defined in s.181(1) · see it in the full Act
employer

(4) In this Act “employer”, in relation to an employee or a worker, means the person by whom the employee or worker is (or, where the employment has ceased, was) employed.

Defined in s.230(4) · see it in the full Act

(6) This section has effect subject to sections 43K , 47B(3) and 49B(10) ; and for the purposes of Part XIII so far as relating to Part IVA or section 47B, “worker”, “worker’s contract” and, in relation to a worker, “employer”, “employment” and “employed” have the extended meaning given by section 43K.

Defined in s.230(6) · see it in the full Act
employed

and “employed” shall be construed accordingly.

Defined in s.230(5) · see it in the full Act

(6) This section has effect subject to sections 43K , 47B(3) and 49B(10) ; and for the purposes of Part XIII so far as relating to Part IVA or section 47B, “worker”, “worker’s contract” and, in relation to a worker, “employer”, “employment” and “employed” have the extended meaning given by section 43K.

Defined in s.230(6) · see it in the full Act
trial period

“trial period” shall be construed in accordance with section 138(3).

Defined in s.181(1) · see it in the full Act
dismissal

“dismissal” and “dismissed” shall be construed in accordance with sections 136 to 138,

Defined in s.181(1) · see it in the full Act

Cases considering section 138 7

East London NHS Foundation Trust v O'Connor

[2019] UKEAT 0113_19_2910 · 29 October 2019Limits

Section 138 was construed as a qualification to the dismissal definition in section 136. Its reference to the end of employment presupposes the dismissal identified by section 136 and does not create an independent form of termination. A statutory trial period can begin only at the end of employment under a previous contract, following an actual dismissal. Because there was no dismissal before 3 July 2017, the trial beginning then was not statutory. The provision was recognised as the limited statutory basis for a training extension of a four-week trial period. No such agreed extension was suggested on the facts.

George v London Borough Of Brent

[2014] UKEAT 0507_13_2705 · 27 May 2014Interprets

The Appeal Tribunal explained that renewal or re-engagement will generally mean there has been no dismissal for redundancy-payment purposes. (see para [27]) Where renewed or re-engaged employment has materially different terms, the statute provides a four-week trial period, extendable for training. Termination during that period preserves dismissal status for redundancy-payment purposes. (see para [27])

Osborne & 29 Ors v Capita Business Services Ltd & 3 Ors (Transfer of Undertakings)

[2016] UKEAT 0048_16_1706 · 17 June 2016

The Tribunal referred to the provision when explaining that acceptance of suitable alternative work could affect redundancy consequences although the original employment had been terminated. (see para [17])

1 more judgment, and what each says about section 138, are in the case-law panel in the full Act.