Dismissing an employee is not a decision most employers take lightly and can be one of the toughest jobs you may have to do as an employer. However, it may be necessary in order to protect your business and with the right legal knowledge and support, you will hopefully be able to do it fairly and avoid too much stress for both you and your employee.
Writing a clear and thorough dismissal letter is key to making sure your employee understands why you are terminating their employment. It also reduces the likelihood of any legal action brought against you.
In this practical guide, we look at the legal obligations of employers to ensure a dismissal is fair, the importance of a dismissal letter and the risks involved with getting it wrong. We also explain how to write a dismissal letter and list what it should include.
What is a Dismissal Letter?
A dismissal letter is a formal written notification from an employer to confirm the end of an employment relationship with an employee. It is also known as a termination letter or notice of termination.
When Should You Send an Employment Dismissal Letter?
You should send an employment dismissal letter to the affected employee as soon as possible after you have decided to dismiss them. Where an employee has requested a written statement of dismissal, it should be sent within 14 days of that request.
It is important to send a dismissal letter promptly, as a delay could be considered unfair and may breach the Acas Code of Practice.
Many employers hand over a dismissal letter at the termination meeting with the employee. Misunderstandings are not uncommon during verbal dismissals, so following everything up in writing is important to avoid misunderstandings and confusion.
Fair Reasons for Employee Dismissal
Employees must not be unfairly dismissed by their employers, so to fairly dismiss an employee, you must have a genuine and valid reason to do so.
The valid reasons for which you can legally and fairly dismiss an employee are as follows:
- The employee’s capability, for example, where the employee can’t do the job or is underperforming
- The employee’s conduct, where there are serious misconduct issues or a sequence of less serious acts
- Where the employee’s job is no longer needed, i.e. redundancy
- Something that prevents the employee from legally doing their job, for example, a driver losing their driving licence
- Where there is some other substantial reason that justifies the employee’s dismissal, for example, a non-renewal of a fixed-term contract of the employee recruited as maternity leave cover.
Dismissing Fairly
Even if you can show that you have a valid and fair reason to dismiss, you still need to demonstrate that you have followed a fair procedure and that the decision to dismiss was reasonable in all the circumstances.
To have acted reasonably, you must have:
- carried out a proper and thorough investigation
- followed any procedures set out in your disciplinary and dismissal policies
- informed the affected employee why they were being considered for dismissal and/or undertaken some form of consultation
- given the employee ample time to consider the proposal and make representations before a final decision was reached
- considered all reasonable alternatives to dismissal
- allowed the employee to be accompanied by a trade union representative or colleague at any disciplinary or dismissal hearing
- given the employee the opportunity to appeal the decision.
What amounts to a fair dismissal procedure will depend on the circumstances of the case. It will also depend on the size of your business and the resources available to you. A small business will not be expected to take the same steps in investigating and dealing with dismissal as a much larger employer; however, you should try and comply with the procedural steps set out above, where at all possible.
Is It Necessary to Write a Dismissal Letter?
Section 92 of the Employment Rights Act 1996 requires that any employee who has been continuously employed by you for two years or more on the effective date of termination will be entitled to a written statement giving reasons for their dismissal. It doesn’t matter whether the employment contract is terminated with or without notice. In most cases, the statutory right to a dismissal letter will be triggered when an employee reasonably requests one and where this occurs, you are obliged to provide the written statement within 14 days of the request.
When an employee is legally entitled to a dismissal letter but fails to provide one, or the reasons given for the dismissal are inadequate or untrue, an employee can bring a complaint to an employment tribunal.
It may not always be a legal requirement to confirm dismissal in writing; however, it is a good idea to do so for many reasons. In particular, a written dismissal letter prevents uncertainty or misunderstandings by laying out the reasons for termination. It is also a useful means of communicating other important details, like reminding the employee to return company property.
Putting the grounds for dismissal in writing in a letter is important and can also demonstrate that you have followed a fair and lawful dismissal procedure, thus managing your legal risk.
Writing an Employee Dismissal Letter
Your dismissal letter should be formal, with a professional but considerate tone. You should try and avoid being too long-winded to avoid unnecessary stress and confusion in an already difficult situation.
You can also visit the Advisory, Conciliation and Arbitration Service (Acas) website, where you can refer to multiple disciplinary outcome letter templates.
What to Include
The contents of a dismissal letter will vary depending on the type of dismissal and the reasons behind your decision to dismiss the employee. However, the letter should always incorporate the below information:
- The reason for the dismissal, including any facts and evidence to back up your decision.
- The factors that influenced your decision to dismiss, for example, any live written disciplinary warnings. It may be helpful to clarify why dismissal was deemed the most fitting course of action as opposed to any alternatives to dismissal.
- The process that you followed in arriving at your decision, for example, any investigatory and disciplinary hearings that have taken place.
- Whether the employee is required to work their notice period or if they will be paid in lieu of notice
- Information about any benefits the business may include in the final salary, such as any leftover holiday, sick pay and other benefits
- The effective date of termination of the employment contract.
- Any practical information such as arrangements for the return of company property or reminding them of any agreements such as Non-Disclosure Agreements that remain active after their termination
- Notifying them of their right to appeal the decision to dismiss. This should include the appeals procedure and who to notify if they want to appeal, as well as a reasonable timeframe within which to do so.
Below is a template dismissal letter designed for small businesses, which you can tailor to the facts of your case.
An Example Template for a Dismissal Letter
Dear (employee name)
Re: Termination of Employment
This letter is to formally confirm the decision that your employment with (business name) will end as of (effective termination date).
Your employment has been terminated because of the following reason(s):
(provide detailed reasons and factual information. Also, refer to any other factors that influenced your decision).
You will be paid until (insert date), and you will also receive (list any benefits such as accrued holiday entitlement they will receive).
You are required to return all company equipment, keys, or any other company property in your possession to the office by (insert relevant date). You will also remain bound by any post-termination confidentiality obligations and restrictive covenants until these expire under the terms of your contract of employment.
In accordance with the company’s written disciplinary procedure, you have the right to appeal this decision. If you wish to appeal, please set out your reasons in writing and send these to (insert name of appeal contact) at (address details) by (insert date).
If you have any questions regarding the termination process or require further clarification, please contact (contact person) at (contact email/telephone number).
Yours Sincerely,
(Name)
(Position)
(Contact Information)
The Risks of Getting It Wrong
If your dismissal letter does not include the right information, this could harm your ability to defend any claim of unfair dismissal brought against you in the future. If such a claim is made against you following termination of employment, the contents of the dismissal letter will be thoroughly examined by an employment tribunal.
Failing to detail the reasons for the dismissal, for example, is, in itself, likely to indicate that a fair process has not been followed. It will also potentially leave you open to an adverse inference that any reason put forward to the tribunal in defence of any claim for unfair dismissal is not actually the real reason for the dismissal.
You should, therefore, use the dismissal letter as your opportunity not only to inform the employee of why and when their contract will come to an end but also to demonstrate that you have a fair reason to dismiss and have followed a fair process.
Issues Facing Small Businesses When It Comes to Dismissing An Employee
There are common barriers that especially affect SMEs when it comes to dismissing an employee:
- Smaller businesses are unlikely to have a legal team or dedicated HR department, making it challenging to navigate the law regarding fair dismissal.
- Owing to a lack of resources, smaller businesses are often overly cautious or hesitant when it comes to dismissals as they worry about making a mistake during the dismissal procedure and the potential legal consequences of this.
- It is harder to terminate someone’s employment in a close-knit work environment where personal relationships are common. There is also a worry that one person’s departure from a small team could have a significant impact on team morale.
- Small businesses often don’t have robust documentation in place, which can pose huge challenges when it comes to justifying a dismissal or defending against a potential legal claim.
How We Can Help
We understand the challenges facing small businesses and are here to help you navigate the complexities of employee dismissals while at the same time protecting your business.
Contact our experienced team of employment law specialists on 0300 303 2071 or email us if you need support with drafting a dismissal letter or have any queries relating to employee dismissals.
FAQ
What is a dismissal letter?
A dismissal letter is a formal written notification from an employer to confirm the end of an employment relationship with an employee.
What must a dismissal letter include?
Put simply, a dismissal letter should clearly set out the reasons for the dismissal and the date the employment contract will end.
What are lawful reasons for dismissal?
The different types of dismissal are those for conduct/misconduct, performance or capability, redundancy, statutory illegality and some other substantial reason.
When will a dismissal be deemed unlawful?
A dismissal will be deemed unlawful if you did not have a fair reason to dismiss or if you failed to follow a fair and lawful process when carrying out the dismissal.
