What to consider when dismissing an employee

Occasionally, dismissal can be the only feasible option left to employers, but proceeding confidently is not always easy, given the risk of a tribunal claim. I’ve listed below a few things to consider when dismissing an employee.

Dismissal of an employee will be unfair unless:

1. The employer can show the reason for the dismissal was a potentially fair reason. There are five potentially fair reasons:

• Capability or qualifications - in relation to the work the employee was employed to do.
• Conduct - may be a single act of serious misconduct (gross misconduct) or a series of acts that are less serious.
• Redundancy - due to business closure, workplace closure, or having a reduced requirement for employees to carry out work of a particular kind or to carry out work at the place the employee is employed to work.
• Breach of a statutory duty or restriction - if the employee could not continue to work in the position without either the employee or employer contravening a duty or restriction imposed by, or under, an enactment e.g. loss of driving licence when position requires employee to drive.
• Some other substantial reason - of a kind such as to justify the dismissal of an employee holding the position which the employee held e.g. irreconcilable personality clash, refusal of the employee to accept reasonable post-termination restrictions.

2. The tribunal finds that the employer has acted reasonably in treating that reason as a sufficient reason for dismissal. The dismissal must be both procedurally and substantively fair.

The test for reasonableness

Procedural fairness - in order to act reasonably, an employer must follow a fair procedure when dismissing an employee. Procedurally unfair dismissals will be classed as unfair regardless of whether the outcome would have been the same had a fair procedure been followed. Compensation in these types of cases will however be reduced to reflect the chance that there would have been a fair dismissal if the dismissal had not been procedurally unfair.

Substantive fairness - did the employer’s decision to dismiss the employee fall within the range of reasonable responses that a reasonable employer in those circumstances and in that business might have adopted? The reasonableness of the employer’s conduct will therefore be assessed taking into account all circumstances of the case and the facts known to the employer at the time of the dismissal.

Who can claim for unfair dismissal?

Generally employees must have completed a qualifying period of continuous service before they have the right not to be unfairly dismissed. The qualifying period is 2 years.

Employees with less than 2 years’ service can therefore not claim unfair dismissal and can generally be dismissed without the employer requiring to meet the criteria for fairness.

Some dismissals, however, will be treated as automatically unfair regardless of length of service, such as a dismissal for reasons connected with pregnancy, whistleblowing or an application for a flexible working request.

Making a claim

Employees must first contact ACAS to register for mandatory early conciliation. If settlement cannot be reached, the employee can pay the necessary fee and bring a claim in the employment tribunal. A claim must be presented within 3 months from the date of termination, other than in exceptional circumstances when the deadline can be extended.

The employee must show they were dismissed, either expressly or constructively. The burden of proof then passes to the employer to establish the reason for dismissal, and that the reason was fair.

Remedies

Reinstatement order - employer must re-employ the employee and treat them as if they were never dismissed.

Re-engagement order - employee must be engaged by the employer in employment that is comparable to the job from which they were dismissed or in other suitable employment.

Compensation - most common remedy. Consists of a basic award based on a formula, and a compensatory award based on what is considered just and equitable based on financial loss caused to the employee. The employee has a duty to take reasonable steps to mitigate their loss. The maximum compensation is the lower of 52 weeks’ pay or £78,335 (this figure changes annually in line with inflation).

Some dismissals can be dealt with by way of a Settlement Agreement which is an agreement between employer and employee to compromise an employee’s contractual and statutory claims on termination of employment. This would mean that the employee would waive their right to bring a claim for unfair dismissal in return for an amount of compensation payable by the employer. For further information on settlement agreements please click here.