Sometimes, dismissing an employee is unavoidable. It may be because an individual has engaged in misconduct, underperforming at work, or your business cannot simply afford to keep on all the current staff. As an employer, no matter how big or small your business is, public or private, it is crucial that you approach any dismissal in a fair and lawful way. If not, you risk potential exposure to costly employment tribunal claims, and reputational damage.
What is a fair dismissal?
In the UK, under the Employment Rights Act 1996, a fair dismissal would involve an employer illustrating that the dismissal of an employee is due to one of the below 5 fair reasons of dismissal:
This would involve some form of misconduct, such as an employee who has continuous unauthorised absences or constantly late for work. It could even be due to serious misconduct, such as theft or discriminatory behaviour.
Capability or qualifications for the job
In terms of capability, this would refer to an employee’s ability to do their job, such as poor performance, or inability to carry out the tasks required in their job, due to ill-health. Dismissals related to qualifications would be connected to the lack of qualifications required for the position and job role.
In the UK, redundancies are lawfully fair if the job ceases to exist, the organisation needs to cut costs and reduce the number of staff, or the business or site is closing.
Statutory duty or restriction omitting the continuity of employment
This occurs when continuing to employ someone would mean that you are breaking the law. For instance, an employee’s right to work in the UK has expired, or an employee whose sole role is to drive has lost their licence.
Some other substantial reason (SOSR) which justifies the dismissal
SOSR can be a fair reason for dismissal, when no other potentially fair reasons apply. An example of an SOSR dismissal could be the expiry of a fixed-term contract (e.g. covering maternity leave) to allow the original employee to return. Other examples could include conflict of interest, personality clashes, or a breakdown of mutual trust and confidence.
Following a fair dismissal process
Even if there is a fair reason for dismissing an employee, there must also be fair dismissal procedure – and the process that you follow will be dependent on the reason for dismissal.
In cases of conduct and capability, you should comply with your own procedure, and always refer to the ACAS Code of Practice on Disciplinary and Grievance Procedures, as failure to follow the ACAS code can increase the award of damage made against you by up to 25%.
The ACAS Code of practice sets out the steps that must be taken prior to dismissal. In the first instance, you should undergo an investigation on the issues. The employee should then be provided with a letter informing them of the issues and inviting them to a formal meeting. During the meeting, the decision of dismissal can be addressed, and this must then be provided to the employee in writing. It is also essential to advise the employee that they have the right to appeal the decision and provide a deadline for appeal.
When undergoing redundancies, it is important to follow a structured procedure. Employers must consult all employees who will be affected on the change. As per ACAS guidance, if making more than 20 employees redundant within 90-days, trade unions or employee representatives must be consulted. When selecting employees for redundancy, discrimination should be avoided, and selection should be based on work related criteria, such as skills qualifications, performance or their
disciplinary and attendance records. It is also important to try and find suitable alternative employment within the organisation for those selected for redundancy, and an appeals process should also be set up.
It is also important to note, that if you are dismissing an employee on the grounds of illness, the employee may be classed as having a disability. Under the Equality Act 2010, it is the employer’s duty to make reasonable adjustments to adapt the working arrangements, to assist a disabled employee. This could be a phased return to work following long-term sickness, or the provision of specialised equipment.
To ensure that you follow a fair dismissal process and avoid employment tribunal claims on the grounds of discrimination and unfair dismissal, you must illustrate that there are no reasonable adjustments that can be made, and the inability of the employee not being able to perform at their job has a detrimental impact on your business.
Consequences of not following a fair dismissal process
Failure to dismiss on a fair reason could lead to an unfair dismissal claim. This could result in a costly price, as you may be liable to pay a basic award to compensate the employee’s loss of job security, in addition to a compensatory award to reflect the loss of earning of the employee. In some occasions, you may even be ordered to reinstate or re-engage your former employee.
Sometimes, an employee may even bring a claim for wrongful dismissal. Wrongful dismissal involves contract law, and mostly occurs when a contract is terminated without notice, or not in adherence to the contractual notice period. It is important that while you follow a fair dismissal process, you also ensure that when dismissing employees, you give them the whole notice period. Failure to do so, could result in the employee being awarded their full net salary for the contractual notice period, as well as compensation for the loss of additional benefits for that period.