Dismissal – Key Issues to Consider
Employers must take great care to act fairly and lawfully when dismissing employees to reduce the risk of a claim being made at the Employment Tribunal.
The five potentially fair reasons for dismissal:
Conduct. This could be a single act of misconduct or a series of less serious acts
Capability or qualifications. This includes poor performance, ill-health and formal qualifications
Redundancy. This includes workplace closure, business closure, or reduced need for employees
Illegality. Where continuing to employ the employee in the position they hold would contravene a statutory restriction (for example, because of their immigration status)
‘Some other substantial reason’. This is a catch-all category of other potentially fair reasons.
If the employer does not have one of these reasons then the dismissal will be unfair even if a fair procedure is adopted. Once the employer has established one of these reasons it must act reasonably, and be seen to do so, before dismissing an employee.
The employer must follow a fair procedure.
Even if there is a potentially fair reason for dismissing an employee, an employer must still follow an appropriate fair procedure before deciding whether to dismiss. This means that it has carry out a proper investigation, consider alternative penalties, act consistently (by reference to how it has dealt with similar incidents) and generally act reasonably and fairly.
The employer must act reasonably in treating the reason for dismissal as sufficient to dismiss.
Even if there is a potentially fair reason for the dismissal and the employer has followed a fair procedure, the employer must also act reasonably in treating that reason as a sufficient reason for dismissal.
The employee should be dismissed in accordance with their contract.
Employees generally have a right to be given a period of notice (or, depending on their contract, a payment in lieu of notice if their employment is terminated). Employers must not base the dismissal on a reason that is discriminatory. An employer must not base a dismissal on a reason that is directly or indirectly discriminatory based on a protected characteristic, and must not discriminate against an employee during the dismissal process
Restrictive covenants and wrongful dismissal
Dismissing in a manner that breaches an employee’s contract is likely to lose the employer the benefit of any contractual rights, such as post employment restrictions preventing the employee working for a competitor. It would also result in the employee having a claim for wrongful dismissal.
Sometimes, from both a practical and commercial point of view, it is better to try to reach a financial agreement with an employee to leave. There are risks in proposing such a solution, so it is advisable to take legal advice before entering into any negotiations.
Generally, employees must have completed a qualifying period of two years’ continuous employment before they can bring a claim for unfair dismissal, although there are exceptions (for equality and/or discrimination claims).
Sometimes, from both a practical and commercial point of view, it is better to try to reach a financial agreement with an employee to ensure that they do not take any further action as a result of the termination of their employment. It is advisable that employers take legal advice before entering into any negotiations, and that a formal settlement agreement is signed by the parties.