Employee Dismissal

What is employee dismissal?

Employee dismissal is the termination of an employee’s contract with an organisation or business. It can occur for a number of reasons, including poor performance or misconduct. Dismissal can be either voluntary or involuntary and can be done with or without cause.

Dismissing employees can be risky and can lead to the employee attempting to claim unfair dismissal, so for advice on dismissals, our expert employment law solicitors are here to help and have significant experience of advising on the dismissal process.

How can an employer dismiss an employee fairly?

By law, there are only 5 reasons that an employer can rely on as being potentially fair reasons to carry out a fair dismissal process. They are:

• Misconduct (or gross misconduct) – where an employee has done something wrong (this type of potential dismissal will usually happen after a disciplinary hearing). It can also occur upon the serious poor performance of an individual.
• Capability – this can either include the individual’s poor performance or a medical reason meaning the employee is not capable of doing their job.
• Redundancy – where an employee’s job is disappearing.
• Statutory illegality – where an employee can no longer legally be employed, for example, because they are no longer entitled to work in the UK.
• Some other substantial reason – this is quite a wide-ranging reason and can cover scenarios where, for example, an employer is under pressure from a third party (such as a client or customer) to carry out the dismissal of an employee. Some other substantial reason dismissals can also happen where an employee refuses a new employment contract on reduced terms.

Establishing the legal reason (one of the five above reasons for dismissal) is always the starting point for an employer to carry out a fair dismissal.

Does an employer need to follow a fair procedure to dismiss an employee?

Yes. By law, a valid reason for dismissal is not enough, because as well as needing one of the above 5 potentially fair reasons to carry out a dismissal, an employer also needs to follow a fair procedure before it can dismiss an employee for that reason. A failure to act fairly could potentially result in the dismissal being unfair and could lead to employees claiming unfair dismissal. Employers should have written policies setting out what dismissal procedures they will follow in the case of, for example, a misconduct or a capability dismissal. It’s good practice to keep these policies together in a Staff Handbook and to make that handbook accessible to employees.

What is an unfair dismissal claim?

An unfair dismissal is when an employer fails to rely on one of the 5 reasons above to carry out the dismissal of an employee or doesn’t carry out that dismissal in a reasonable way, e.g. because they have failed to follow a fair procedure. Employees need to have been employed for 2 years or more by their employer before they can bring a legal claim that they’ve been unfairly dismissed (under the Employment Rights Act 1996). Read more here about bringing an Employment Tribunal claim, or here about defending a claim from a former employee. Unfair dismissal claims can entitle an employee to a compensatory award of up to a year’s salary.

What is an automatic unfair dismissal?

A dismissal will be an automatically unfair dismissal if it’s carried out because of certain reasons. By way of some examples, a dismissal will be an automatically unfair dismissal if it’s because an employee:

• Has made a flexible working request;
• Is pregnant or on maternity leave;
• Wants to take paternity, parental or adoption leave;
• Has trade union membership or has gone on strike;
• Has asked for something they are legally entitled to, e.g. to be paid the National Living Wage;
• Is doing jury service;
• Has blown the whistle;
• Has made a complaint about a health & safety issue;
• Is a part-time worker.

With most automatic unfair dismissal claims, an employee doesn’t need to have been employed for 2 years to bring an Employment Tribunal claim.

What if an employee has been with their employer for less than 2 years?

If an employee has less than 2 years’ service with their employer, they can’t normally bring a claim for unfair dismissal (only an automatic unfair dismissal claim). This means that it is easier to carry out a fair dismissal of an employee with less than 2 years’ service, as long as the employer does not:

• Base its decision to carry out the dismissal on any discriminatory reason (e.g. because of an employee’s age, sex, race, disability, religion etc);
• Dismiss in response to the employee blowing the whistle; or
• Dismiss for a reason which could be an automatically unfair dismissal (see list above).

When can an employee be dismissed for gross misconduct?

Gross misconduct is misconduct which is so serious that the employee can be dismissed without notice (also known as summary dismissal). Whether something amounts to gross misconduct will depend on the circumstances and the type of work that the employee carries out. Things like theft, fraud, physical violence, serious negligence, serious insubordination or serious breach of health & safety rules will often amount to gross misconduct (and termination without notice). An employer’s disciplinary procedure, in its Staff Handbook, should contain examples of things that can amount to gross misconduct.

Even in a gross misconduct case, the employer must still carry out a thorough investigation and a full and fair procedure, ensuring there is sufficient evidence that gross misconduct has taken place. This includes inviting the employee to a disciplinary hearing and allowing them to bring a colleague or trade union representative with them.

If the employee carries out misconduct which is not so serious as to justify summary dismissal, then a final written warning should usually have been issued before an employer can dismiss an employee.

When can an employee be dismissed for ill-health?

Where an employee is incapable of doing their job because of ill-health, an employer may look to start an appropriate procedure with a view to dismissing the employee on the grounds of their capability. Before going down this route, examples of the employer’s responsibilities are:

• Discount pregnancy and (usually) disability-related absences from an employee’s attendance records;
• Support the employee and consider any changes that can reasonably be made to the employee’s job to help them;
• Consider all other options other than dismissal and ensure that dismissal is a last resort;
• Obtain up to date medical advice on the employee;
• Follow an appropriate procedure (often called a capability process) before dismissing.

There are risks associated with dismissing an employee because of their medical capability, not least risks of discriminating against the employee if their condition is serious enough to be a disability. Even if the employee has been employed for less than 2 years, this can still be an unlawful termination under the Equality Act.

What about dismissals because of redundancy?

This will usually happen when a role is no longer needed. Read more about redundancies here.

Like in a capability case, an employer which is making redundancies should ensure that full notice under the employment contract is given in order to avoid a claim for wrongful dismissal. If an employee’s old job is at risk of redundancy, an employer must also ensure that other vacancies are explored and that dismissal is a last resort. Employees who are on maternity leave also have additional special protections against redundancy.

What is constructive dismissal?

Constructive dismissal is where an employee resigns because of their employer’s conduct towards them and then brings a claim to the Tribunal. Read more here about bringing a Tribunal claim, or here about defending a claim.

To win a constructive dismissal claim, the individual would need to show that their employer had committed a fundamental breach of their employment contract. Common examples of situations when an employer breaches the employment contract are where:

• The employer makes unreasonable changes to the individual’s contract – e.g. in relation to things like place of work, working hours, job duties;
• The employer fails to pay the individual’s salary;
• The individual raises a grievance but it’s not dealt with by the employer under a fair process;
• The individual says they’ve been discriminated against (whether by the employer or by other employees) and the employer fails to look into it.

What is wrongful dismissal?

Wrongful dismissal is where an employer has dismissed an individual in breach of the employment contract. An example would be where an individual has a notice period of 1 month in their contract and the employer commits a breach of the contract by only giving them a week’s notice or failing to pay their full notice pay. Read more here about bringing a Tribunal claim, or here about defending a claim.

How important is the employment contract?

Very. Checking the contract should be the starting point before dismissals are considered. One of the first things you’d check is the individual’s notice period to see what contractual notice needs to be given to the employee (apart from in gross misconduct cases, when summary dismissal is allowed). You should also check things like whether they are on a fixed term contract or whether there is a contractual dismissal procedure in their contract.

What notice period and information about reasons for dismissal must be given?

The employee’s statutory notice period is sometimes different to their contractual notice, so it’s important to take legal advice if unsure. Usually, employees are entitled to at least a week’s notice for each completed year of employment (up to a maximum of twelve weeks).

It is also a legal requirement to give the employee a written statement of the reasons for dismissal, even if the decision to dismiss is communicated to them verbally.

When is a Settlement Agreement used?

Settlement agreements are sometimes used when a business and an individual agree to part ways. For many employers, they are the safest way of ending the employment relationship. Read more about settlement agreements from an employers’ perspective here, or settlement agreements from an employee’s perspective here.

If you need any advice on dismissals, please contact a member of our employment law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.