Dismissal

by Kate Russell

In a nutshell

1. Dismissal procedures

We should make sure that all avenues have been explored – for example, training, proper standard setting, coaching, feedback, monitoring and/or considering alternative employment – before taking the final step and dismissing. The requirements relating to dismissal for conduct and capability are largely found in the ACAS Code of Practice 1 which is intended to provide basic practical guidance to employers, employees and their companions.

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2. Fairness of a dismissal

In considering the fairness of a dismissal a tribunal will ask two questions:

  1. Was the dismissal for a fair reason?
  2. If it was, was it procedurally fair?

In most cases, to claim unfair dismissal

  • The person must be an employee
  • He must have two years’ continuous employment

The Agency Workers Regulations 2010 have now been enacted and came into force on 1 October 2011. The Regulations give new rights to agency workers after 12 weeks’ work and prohibit detrimental treatment or dismissal of agency workers on the ground of their status. 

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3. Constructive dismissal

Both employer and employee are under a duty to behave reasonably. Seriously unreasonable behaviour in an employer can constitute constructive dismissal. To establish constructive dismissal, the employee must show that four conditions have been met.

  • The employer has fundamentally breached the contract, or there is an intention on the employer’s part no longer to be bound by an essential term of the contract.
  • The employer’s breach caused the employee to leave.
  • The employee did not act too soon by leaving before the breach took place.
  • The employee did not waive the right to terminate the contract after the breach took place by delaying too long before resigning.

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4. Conduct dismissal

Dismissal for a reason relating to the conduct of an employee may be fair, but it is vitally important to follow the correct procedure. Following the three-stage test, the employer must be able to show that he acted reasonably, within a ‘band of reasonable responses’ and that

  • He believed the employee was guilty of misconduct
  • He had reasonable grounds upon which to sustain that belief
  • At the stage at which he formed the belief he had carried out as much investigation into the matter as was reasonable in the circumstances.

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5. Capability dismissal

There are two questions that need to be addressed for a capability dismissal to be in order:

  1. Does the employer honestly believe this employee is incompetent or unsuitable for the job?
  2. Are his grounds for that belief reasonable?

Dismissal on grounds of capability will be for one of three reasons:

  1. Lack of ability or skill
  2. Lack of capability because of ill health
  3. Loss of or failure to achieve a qualification.

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6. Redundancy

Redundancy is still a dismissal, so the statutory dispute procedure must be followed. If an employee is selected for redundancy for unfair reasons, or the correct dismissal procedure is not followed, an employer may be faced with an unfair dismissal claim.

  • He must give as much warning of the redundancies as possible.
  • He must use objective, non-discriminatory criteria when deciding who will be made redundant.
  • He must try to ensure that the selection for redundancy is fair and in accordance with the criteria set.
  • He must try to find alternative employment for the employee.
  • If the employer is proposing to make 20 or more people redundant over a period of 90 days he must consult with trade union or employee representatives before issuing notices.

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7. Statute or some other substantial reason

Even if there is a statutory ban – for example, a driving ban – the employer must satisfy the usual requirement of reasonableness. With the same proviso, dismissal for some other substantial reason may be fair in the following cases:

  • Dismissal of a replacement for a woman who has taken maternity leave
  • Business reorganisation
  • Dismissal for economic, technical or organisational reason following a TUPE transfer
  • Third party pressure to dismiss the employee

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8. Retirement

From October 2006, the default retirement age was set at 65 for men and women. Retirement before the age of 65 by mutual consent is lawful. The default retirement age was removed in October 2011.

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9. Fixed-term contract

A failure to renew a fixed-term contract is regarded as a dismissal and therefore a fixed-term employee may be able to claim unfair dismissal if he has the necessary length of service. This means it is important to follow a fair procedure in respect of any non-renewal.

  • The assumption tends to be that the non-renewal of an FTC must be an SOSR dismissal (some other substantial reason).
  • If the employee on a FTC has two years’ service, and the dismissal is for redundancy, he will be entitled to a statutory redundancy payment.
  • If the FTC is due to an employee going on maternity leave, make sure that you set out the reasons for the FTC and clarify that it will end when the post-holder returns to work.
  • When dismissal is due to the need to make cost savings, employers should treat employees on FTCs in the same ways as employees with permanent contracts in order to demonstrate a fair selection.
  • Make sure that if you have to dismiss an employee on a fixed-term contract before the date has been reached, you limit your liability. If you don’t, you may have to make full payment to the end of the contract.
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10. Wrongful dismissal

Wrongful dismissal means dismissal in breach of contract.

  • The most common breach is where the employee is dismissed without notice or the notice given is too short.
  • The employer must give minimum notice periods as laid down by the law.

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10. Summary dismissal

Summary dismissal is dismissal without notice or pay in lieu following an act of gross misconduct.

  • An employer should list acts which constitute gross misconduct in his disciplinary procedure.
  • He must still follow all the usual disciplinary procedures, even if the employee admits to the gross misconduct.
  • The employee is entitled to his pay to the date of the dismissal and any holiday accrued but not taken.

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11. Other forms of termination of contract

There are several other ways of terminating a contract, each of which may be construed as unfair dismissal if you fail to follow the correct procedures or behave appropriately.

  • Resignation: do not pressure an employee into resigning as this may amount to an actual dismissal.
  • Mutual agreement: tread very carefully here as tribunals are very wary of accepting this option and will expect to see clear evidence that the agreement was in fact mutual.
  • Frustration, where some event occurs which was not envisaged by the parties at the time the contract was entered into, and which makes the contract impossible to perform: tribunals are extremely reluctant to find that a contract has been frustrated.

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12. Fairness and reasonableness

An employer must have a valid reason for the dismissal, and he must also have acted reasonably in all the circumstances entailed in dismissing the employee for that particular reason. If you fail to follow the ACAS Code of Practice, a tribunal may consider several questions.

  • Was the employee given a fair hearing by the employer?
  • What evidence was used at the hearing and was it all used?
  • Had the employee done this before?
  • Did the employer consider warnings? Were these used in the past?
  • Did the employer consider the overall performance of the employee?
  • Was the conduct of the employee looked into thoroughly?
  • Did the employer believe that the employee committed the offence?

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13. Written statement of reasons for dismissal

The Employment Rights Act 1996 provides that employees who have been dismissed may request from their employer a written statement of the reasons for their dismissal, which their employer must provide within 14 days of the effective date of termination.

  • All employees with two year’s continuous service with their employer qualify for this right.
  • An employee who is dismissed either while she is pregnant or during a statutory maternity leave period is entitled to a written statement of the reason without having to request it.

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14. Compensation for unfair dismissal

This may take the form of reinstatement or re-engagement, but it is very rare for either reinstatement or re-engagement to be ordered by an employment tribunal. Financial compensation is split into the Basic Award and the Compensatory Award.

  • The Basic Award is calculated on the same basis as statutory redundancy – by taking the employee’s age, years of service and average weekly pay calculated at the current statutory rate to arrive at a figure.
  • The Compensatory Award is designed to compensate a party and put him in the same position he would be in if the contract had been properly carried out. The award is intended to compensate the employee for financial loss relating to the dismissal, including expenses and loss of benefits.

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