Sometimes dismissing employees is necessary and it’s important to get dismissals right. All employees with at least two years’ continuous service have the right not to be unfairly dismissed. For dismissals deemed to be automatically unfair, the employee generally won’t need to have two years’ continuous service behind them – they are protected from the first day of employment. Automatically, unfair dismissals include those connected to pregnancy, health and safety activities, and whistleblowing. Unfair dismissal claims can be costly, time consuming and damaging to an employer’s reputation.
Dismissal must be for one of five fair reasons set out in the Employment Rights Act 1996 (ERA), and the employer must carry out a fair procedure before dismissing. An employment tribunal also will consider whether the employer acted reasonably in all the circumstances of the case.
If an employment tribunal finds that a dismissal is unfair, it can order the employer to pay compensation to the employee, which is usually capped at the lesser of a year’s gross pay or just under £80,000. It can also order the employer to reinstate the employee, although this is rare.
Potentially fair reason?
There are five potentially fair reasons for dismissal under the Employment Rights Act 1996 (ERA):
Capability or qualifications
Capability dismissals relate to the employee’s ability to do the role and normally centre around poor performance or ill health. Qualifications dismissals are where the employee doesn’t have the necessary technical or professional qualification to do the role.
Conduct
This can be an act of gross misconduct, for example theft, fraud, or dishonesty, or a series of less serious acts.
Redundancy
Where there is a workplace closure or the employer has a reduced requirement for employees.
Statutory restriction
Where, for example, the employee doesn’t have the right to work in the UK so continuing to employ them would be a breach of the immigration rules.
Some other substantial reason (SOSR)
There is no guidance in the ERA as to what this means, but SOSR is designed to cover potentially fair dismissals which do not fall into any of the other categories. A tribunal found that irreconcilable differences between colleagues which cause significant disruption to the business can amount to SOSR. Alternatively, another case found that where a third party demands an employee’s dismissal, that dismissal could be fair for SOSR.
Fair procedure
Once the employer has established a fair reason for the dismissal it must then follow a fair procedure.
The procedure will depend on the dismissal reason; a fair procedure for a gross misconduct dismissal will, for example, be different to that for a redundancy dismissal. However there are some general principles that will apply to most cases: the employee should know that their job is at risk and why; they should be allowed to state their case, they should be informed of the decision in writing; and they should have a right of appeal.
The employer should follow the provisions of the Acas Code if the dismissal is for misconduct or poor performance. As well as going to the general fairness of the dismissal, an employer’s unreasonable failure to comply with the Code can lead to the tribunal increasing any compensation awarded by up to 25 per cent.
The role of HR
A recent case shows that the role of HR in disciplinary investigations should be limited to questions of procedure and law, not culpability which should be reserved for the officer carrying out the investigation. The case related to allegations of misconduct where the HR officer had significant input into the investigating officer’s findings. The officer recommended a finding of misconduct and a written warning, but after amendments from HR, the employee was dismissed for gross misconduct. The tribunal found that the dismissal was fair but this was overturned on appeal.
Reasonableness
Finally, the tribunal will consider whether the employer acted reasonably in all the circumstances of the case in dismissing the employee.
The test is an objective one and what is deemed reasonable will depend on the reason relied on and the specific facts of the case, as well as on the size and resources of the employer. It is not relevant whether or not the tribunal would also have dismissed the employee if it had been in the employer’s shoes. The tribunal must as case law shows, not substitute its own view for that of the employer
Following a proper dismissal process will go a long way towards avoiding any unfair dismissal claims.
Emilie Bennetts, Senior Associate, Charles Russell Speechlys
020 7203 8968 | emilie.bennetts@crsblaw.com
Emilie advises companies and senior individuals on all aspects of employment law, contentious and non-contentious. She is particularly experienced in dealing with complex employment tribunal litigation for employer clients, as well as providing practical advice on a range of day to day employment and HR issues.
