Regrettably, there are times when an employer needs to dismiss an employee. But mention-worthy is that there are correct and incorrect ways to dismiss; those that go about the process the inappropriate way will undoubtedly find themselves before an Employment Tribunal.
Indeed, mistakes can be costly with the typical award for unfair dismissal being £10,812 (Working Families, 2023). It therefore makes sense for employers to understand the law, what constitutes an unfair dismissal, and what a fair dismissal procedure actually looks like.
Understanding the basics of dismissals
According to Alexandra Farmer, Head of Team and a solicitor at WorkNest, a fair dismissal procedure consists of two essential components: (i) having a valid reason to dismiss and (ii) acting reasonably under the circumstances.
The Employment Rights Act of 1996 outlines five potential justifications for dismissal.
- The first of these is dismissal for misconduct such as theft, fraud, bullying, or negligence. As Farmer comments, ‘this could be either one serious incident that warrants dismissal for a first offence, known as gross misconduct, or a series of more minor offences, such as persistent lateness’.
- The second reason is a termination based on qualification or capability. This might also involve performance or a long-term illness absence.
- The third comes redundancy, or the closing of a business, whatever the reason may be.
- Fourth on Farmer's list is a statutory restriction. Here Farmer says that ‘this might apply if continuing to employ the person would break the law, such as a driver losing his driving licence or a worker without the legal right to be employed’.
- The last is known as ‘some other substantial reason’, which may come in several forms. For Farmer, this is a category that employers can fall back to if none of the other potentially fair reasons for dismissal are relevant. She says that this may apply if, for example, ‘an employee is handed a long prison sentence, their conduct outside of work brings the employer into disrepute, or they refuse to accept changes to contractual terms’.
Noteworthy is that simply having a reason alone isn't sufficient when dismissing; the employer must show that they have acted reasonably when acting.
It's about being reasonable
An Employment Tribunal will look at a number of factors when determining if a dismissal was fair and reasonable, including whether the employer properly investigated the issues and considered any mitigating circumstances; whether they informed the employee in writing of the issues and the possibility of dismissal; whether they conducted a hearing and gave the employee a chance to respond; whether they allowed the employee to attend any hearings accompanied; whether they informed the employee in writing of the decision to dismiss; and whether they gave the employee a chance to appeal.
In addition to these components of a fair dismissal procedure, a tribunal will consider whether the decision to dismiss fell within the band of reasonable responses. For example, even if the employer does have grounds for dismissal, this doesn't mean that it was reasonable to take this step; would an informal discussion, letter of concern or written warning have been more appropriate in the circumstances?
It should be remembered, as Farmer highlights, “that there is no legal definition of ‘reasonableness’”.
The tribunal will also take into account whether the employer had detailed performance and conduct guidelines; whether it was reasonable to expect that the employee understood the consequences of their actions; and whether the employer has applied its thinking reasonably and consistently to similar offenses.
In essence, Farmer says that ‘it's important to remember that even if the employer follows a fair dismissal procedure, the employee may have certain characteristics that still renders a dismissal unfair’.
An unfair dismissal
In contrast to the above, ‘a dismissal’, says Farmer, ‘will be considered unfair if the reason does not fall under the scope of one of the five potentially fair reasons for dismissal outlined above; the employer did not follow a fair disciplinary or dismissal process; and/or the decision to dismiss was outside the range of reasonable responses open to the employer’.
This makes it important that employers follow the ACAS Code of Practice on Disciplinary and Grievance Procedures in cases of misconduct or concerns about performance. Farmer warns that an Employment Tribunal will take this into account when assessing whether an employer has acted reasonably if they don't.
A similar process is applied to redundancies with there being three fundamental elements to a fair redundancy process. And Farmer outlines them–‘warning employees of redundancies; the creation of and application of fair and non-discriminatory scoring criteria; and the consulting with employees and exploring suitable alternative employment options’.
She continues: ‘employers who fail to follow a fair selection or consultation process, may find that the dismissal is deemed unfair. If this is the case an employee with at least two years' service may be able to submit a claim to a tribunal for unfair dismissal. Such claims must generally be submitted within three months of the date the employee's employment was terminated’.
Employers also need to be aware that some dismissals or redundancies will be automatically unfair. These include an employee who is pregnant, on maternity or paternity leave, or is exercising any of their statutory rights in relation to this.
But Farmer warns about other protections for employees. These relate to making a protected disclosure, known as whistleblowing; having a concern for health and safety and subsequent refusal to work or perform certain tasks; attempting to assert a statutory employment right; having part-time status; participating in trade union activities, including taking part in industrial action or acting as an employee representative; or making a request to work flexibly. In any of these situations, selecting or dismissing an employee would be automatically unfair.
» An Employment Tribunal will look at a number of factors when determining if a dismissal was fair and reasonable «
There is some comfort for employers, says Farmer: in normal circumstances, employees must have two years' service to bring a claim for unfair dismissal. However, she notes that ‘in cases of an automatically unfair dismissal, the usual time constraints don't apply. This means that if any of the above apply, an individual can usually bring an unfair dismissal claim irrespective of length of service, and regardless of whether an employee has acted reasonably or not’.
As a result, when an automatically unfair dismissal occurs it'll be almost impossible for an employer to justify or defend the matter, which makes it much easier for an employee's claim to succeed. And as Farmer explains, ‘unlike ordinary unfair dismissal, there's no maximum compensation limit if the dismissal is automatically unfair, greatly increasing financial risk to employers’.
To sum up
Dismissals unfortunately happen. However, just because they need to be made doesn't imply that employers need to increase the odds of appearing before an Employment Tribunal. As explained, following the law and guidance will markedly reduce the chance of a claim being made.
Panel: Gross misconduct
Gross misconduct is defined as an act that is so serious that it warrants dismissal without notice or payment in lieu of notice. It is an act that destroys the relationship of trust and confidence between the employer and employee, making the working relationship impossible to maintain.
Despite the seriousness of the offence, employers cannot dismiss someone on the spot; they still need to follow a fair process to dismiss. An instant dismissal is more than likely to lead to a claim of unfair dismissal.
What is considered gross misconduct will differ between employers. Regardless, most would think that any one of the following five situations could amount to gross misconduct, depending on the gravity of the offence. Good advice should therefore be sought.
- Theft, fraud and dishonesty.
- Offensive behaviour which involves harassment, bullying, fighting, aggressive or intimidating behaviour, threats of violence, or dangerous horseplay.
- Health and safety breaches which may involve not using, or removing, machinery guards, persistently refusing to wear Personal Protective Equipment, or driving dangerously. This can result in reputational harm for the employer, who may face a significant liability as well.
- Employees under the influence of drugs or alcohol may have higher levels of absence, lower productivity, and cause accidents that put themselves and their co-workers at risk.
- Damage to property. Conscious or willful actions or gross negligence can lead to significant damage or loss.
- Serious incapacity or misconduct caused by an excess of alcohol or drugs at work. This may be the result of drug or alcohol being consumed in the workplace, supplying the same or merely possessing it onsite.
It should be remembered that to merit summary dismissal, the act must go to the core of the employment relationship and break down the trust and confidence, preventing the relationship from continuing. A fair process to dismiss must still be followed.
