Most employers will, from time to time, face having to dismiss an employee. While it may sometimes be necessary to dismiss an employee, it can be costly and can also impact wider employee morale and potentially damage the business. It should therefore only be considered when all other options have failed.
Even where the employee is guilty of misconduct or their job is clearly redundant, an employer still needs to proceed with caution when dismissing. It is crucial that employers follow the right steps to ensure dismissals are fair; failure to do this could result in an employee bringing a successful claim for unfair dismissal, costing the business a lot of money, time and negative publicity.
To dismiss an employee legally in the UK, an employer must have a valid reason for the dismissal under the Employment Rights Act 1996 (ERA) and a fair dismissal procedure must be followed. Failure to follow a fair procedure may put an employer at risk of a tribunal claim for unfair dismissal, even if the reason for dismissing the employee was valid.
Fair And Unfair Dismissals
For a dismissal to be fair, the reason for the dismissal has to be one of five potentially legitimate fair reasons under S.98 of the ERA – see below – and the employer must have also acted reasonably in conducting the dismissal. To establish this, a tribunal will decide if the dismissal was outside a band of reasonable responses, given the circumstances of the case. If it considers other employers in the same situation would have dismissed the employee, the dismissal will likely be deemed fair. In considering this, the size and administrative resources of the employer will also be taken into account.
As an employer, you must take a wide range of factors into account before deciding to dismiss an employee. For example, take into consideration the employee’s previous record, length of service, and the seriousness of the current incident. However, do bear in mind how these cases have been dealt with in the past, consistency is key.
In addition, an employer should follow a full and fair procedure. This could be the Acas Code of Practice on disciplinary and grievance procedures or if it exists, an employer’s own contractual or customary disciplinary or dismissal policy. A fair process can also prevent an employee from resigning and claiming constructive unfair dismissal during the process. Procedural failings such as lengthy delays, an inadequate investigation and not giving the employee a clear indication of the allegations against them can entitle the employee to resign and claim constructive dismissal.
Where an employer dismisses an employee without good reason and/or without following an appropriate process, this could give rise to a claim for unfair dismissal so long as the employee has at least two years of service. If the claim is successful, a tribunal may order that the employee be permitted to return to work. More commonly, however, tribunals award compensation to the employee. As of 6 April 2022, the maximum basic award for an unfair dismissal claim is £17,130 and the maximum compensatory award is £93,898 or 52 weeks gross pay if lower.
Even if the employee has less than two years of service, they can still be protected from dismissal for a range of reasons, including reasons such as whistleblowing, being pregnant or being a trade union member. Employees are also protected from being dismissed on a discriminatory basis, this include reasons relating to a protected characteristic, for example such ethnicity, gender or sexual orientation.
Fair Reasons For Dismissal
As mentioned above, there are five potentially fair reasons for dismissal under S.98 of the ERA;
- Misconduct
- Capability or qualification
- Redundancy
- Contravention of a statutory restriction
- Some other substantial reasons (SOSR)
Misconduct
This could include theft, fraud, bullying or negligence and could be either one serious incident that justifies dismissal for a first offence, known as gross misconduct, or a series of more minor offences, such as constant lateness. An employer should be able to prove that it had a genuine and reasonable belief that the misconduct took place, even if this is not eventually found to be correct.
An employer’s disciplinary policy should set out examples of misconduct and gross misconduct and should also set out the procedure to be followed when dealing with such incidents. Failure to follow its own policy could leave an employer liable for an unfair dismissal claim. It is also important to thoroughly investigate any allegation of misconduct and to provide the employee with a chance to offer their own version of events and any mitigating circumstances before a decision is made relating to issuing a warning or dismissing.
Capability Or Qualification
This could typically include poor performance, ill health or where an employee loses the necessary qualifications needed for the job (such as a driving licence).
When assessing the reasonableness of a capability dismissal, the tribunal may take into account whether proper appraisals of the employee’s work took place and whether the problem was discussed with the employee and what the employer did to minimise the risk of poor performance. The employer would be expected to give the employee a reasonable chance and length of time to improve, and also to provide training, supervision and encouragement.
Where the capability is a result of ill health, it will be necessary to check the employer’s absence policy and to follow any procedure within this policy before dismissing. An employer should have at least two formal meetings with any employee before deciding to dismiss because of long-term absence and should consider obtaining a report from the employee’s GP or medical specialist, provided that the employee’s consent has been given. In such circumstances, dismissal should be a last resort.
Redundancy
Where there is a closure of a business or a particular workplace or less of a requirement for an employee’s role, redundancy may be a fair reason for dismissal. The position should, however, be genuinely redundant, not merely as a way around the need to deal with a conduct or capacity issue. The selection process for redundancy must be fair and transparent otherwise an employee may still be able to file for unfair dismissal. Furthermore, a consultation with all affected employees must have been conducted to explore if there are any alternatives to redundancy, such as a reduction of salary or hours.
Statutory Illegality Or Breach Of A Statutory Restriction
Examples of dismissals that could fall within this category include where the employee doesn’t have or has lost a qualification they need to do their job, where the employer discovers that the employee has a criminal record or where continued employment would breach the immigration rules.
Some Other Substantial Reason (SOSR)
This ‘catch-all’ category may be relied upon by an employer if none of the other potentially fair reasons can be applied. Case law has provided some examples where the courts have found an employee was fairly dismissed for SOSR. This includes where an employee refuses to accept changes to contractual terms, where the dismissal is necessary to avoid reputational risk to the company, pressure from a third party client (for example a client who will not work with the employer unless the employee is dismissed) and where a personality clash has broken down the employment relationship so that so that these people cannot work together.
Where dismissal for SOSR is being considered, the reason should still be objectively substantial, genuine, and should have a significant impact on the organisation. It may also be appropriate for an employer to consider reasonable steps to solve the problem before resorting to dismissal.
Minimising The Risks Of An Unfair Dismissal Claim
Below are some of the things employers can do to avoid an unfair dismissal claim.
- Ensure that the business has a comprehensive up-to-date set of policies in employees’ contracts or/and staff handbook which details the standards of performance and conduct expected of an employee. These policies should be communicated to all employees and should be easily accessible.
- Inform the employee in question in writing why they were being considered for dismissal
- Follow a fair disciplinary procedure. When dismissing someone for misconduct or culpable poor performance, employees should follow the Acas code of practice on disciplinary and grievance procedures. If this is not followed, the tribunal may increase any compensation awarded to an employee for unfair dismissal by up to 25%.
- As part of following a fair dismissal procedure, it is important to listen carefully to the employee, conduct a thorough investigation and be mindful of any mitigating circumstances.
- All staff should be treated consistently, even if they are not technically employees. However, it is also necessary to consider individual circumstances, especially for misconduct, such as length of service and previous record.
- Ensure the employee knows they can be accompanied at dismissal or disciplinary hearings
- Allow the employee a right of appeal against the dismissal and ensure that it is heard by someone senior to the person who dismissed the employee and that they have not previously been involved in the dismissal
Our employment team are experts in advising on dismissals and can assist you to deal with potential dismissals fairly. Contact our employment solicitors in Northampton, Birmingham and London at info@witansolicitors.co.uk to discuss your case today.
