Dismissal

by Kate Russell

Fairness of a dismissal

There are a number of fair reasons for dismissal, which fall into several categories:

  • Conduct
  • Capability
  • Redundancy
  • Statute
  • Some other substantial reason.

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?
Example

H had worked in a tanning salon for five years. Standard procedure was that new customers had to fill in a self-analysis form to determine how many minutes they could spend on a sunbed, they would then be given information on the dangers of using sunbeds. This leaflet contained a disclaimer, which was a regulatory requirement for the salon’s licence and a requirement of its insurers.

H did not ask a new customer to fill out a form, something that she admitted she knew she was supposed to do. She said that it was a ‘one-off incident’, that it was a slow day during which she felt tired and lethargic, and that the customer seemed to know what she wanted.

Brenda Shirley, a director of the company, asked her daughter, Linda Shirley (a former director of the company), to carry out an investigation, after which H was suspended. At a further investigatory meeting, attended by both of the Ms Shirleys and Ms Pepper (H’s line manager) Ms Pepper complained that she had been harassed by H about the allegations made against her and that H’s boyfriend had been unpleasant when he came to collect her wages during her suspension.

H was invited to a disciplinary hearing and was charged with a failure to comply with the company’s procedures. Linda Shirley chaired the discipline meeting and dismissed H for gross misconduct. H complained that she had been unfairly dismissed. The employment tribunal agreed, finding that the company had breached the ACAS Code of Practice and its own disciplinary procedure by having Linda Shirley undertake both the investigation and disciplinary hearing.

The company had a potentially fair reason for dismissing H, but it had wrongly taken into account H’s alleged ‘bad attitude’, which she had never been formally warned about. In addition, the tribunal thought that the employer had inappropriately taken into account the poor behaviour of H’s boyfriend, rather than concentrating on the matter in hand (her alleged misconduct). However, H had contributed to her dismissal. She knew the importance of requiring customers to fill in the necessary paperwork. Her tiredness on the day in question was not an excuse. Her compensation was therefore reduced to zero.

Who can claim unfair dismissal?

To qualify for protection against unfair dismissal, an employee must meet the following conditions:

  1. He must be employed (the amount of hours worked per week is irrelevant). The self-employed are excluded
  2. He must have two years’ continuous employment (however, see below for a list of automatic unfair dismissals).

Only those employed under a contract of employment are able to claim the protection of unfair dismissal and constructive unfair dismissal. However, it’s not always easy to determine who is an employee and who has other working status (see Employment Contracts). In the early 2000s, there was a series of cases during which the senior courts were prepared to give credence to the view that in certain circumstances an agency worker may become an employee, with the consequent right to complain of unfair dismissal.

Example

The Court of Appeal was asked to consider a fairly typical arrangement whereby an individual, D, was supplied via an employment agency, BSB, to provide services to one of its clients, Wandsworth Borough Council. While the court was not strictly called upon to determine the employment status of D vis-à-vis the council (as she had not appealed against the tribunal’s finding that she was not an employee of the council), it nonetheless gave guidance on the factors that tribunals should consider when dealing with this issue. It said that they should consider the possibility of there being an implied contract of employment between the end-user and the agency worker, even in the absence of an express contract between them. The clear inference was that D would have been found to be employed by the council had the point been tested.

This line of thinking was reversed in 2008 when the Court of Appeal said that unless there were any grounds to consider that an agency worker was anything else, he would go on being treated as an agency worker. The passage of time didn’t confer any rights as an employee.

Example

J had been working for Greenwich Council since 2001, providing her services through a series of temp agencies. During this time, she did not enter into any written contract with Greenwich Council, and was not entitled to sickness or holiday benefits. She did, however, sign a contract with the temp agency, which described her as a self-employed worker.

In 2004, this arrangement with the council came to an end, and J complained unsuccessfully that she had been unfairly dismissed, citing the decision in Dacas to argue that the extensive period of her engagement meant she should have the same status as other council employees. Eventually the case came before the Court of Appeal. The Court agreed with the earlier decisions that J had not acquired employment status. It made a number of observations:

  • Where the agency relationship is genuine, which is likely to be the case where no pre-existing relationship exists between the worker and the client, the tribunal should rarely find sufficient evidence to imply a contract of employment
  • If such a contract is to be inferred, there would need to be some words or conduct to indicate that the relationship was no longer consistent with an agency arrangement
  • The mere passage of time would not typically justify the implication of a contract
  • Where there is a pre-existing contractual arrangement and the agency is merely acting as an agent for the purposes of paying wages to the temp, it believed the tribunal would be entitled to conclude that these arrangements were a sham, and that the original contract was never brought to an end.

While this was good news for employers, please note that The Agency Workers Regulations 2010 have now been enacted and are due to come into force on 1 October 2011. The Regulations will 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.

This means that agency workers will be entitled to the same basic working and employment conditions as those employed directly by the end-user (‘hirer’) on completion of 12 consecutive weeks in the same role for the same hirer.

Basic working and employment conditions are those relating to pay, working time, rest breaks and annual leave. Pay for these purposes is any amount paid in connection with the employment or engagement and includes bonuses, fees or commissions that are directly attributable to the amount or quality of the work done by the worker and benefits in the form of fixed value vouchers or stamps. Pay does not include contractual payments relating to sick leave, pension, redundancy or maternity, adoption or paternity leave.

In order to make a claim, the employee’s termination date normally has to have been less than three months previously. In other words, the employee only has three months from the date of dismissal to bring the claim (see Limitation Period below).

Service qualification

In most cases, an employee has to have two years’ service qualification to claim unfair dismissal. The date on which an employee starts work is included when computing the period of continuous employment for the purposes of unfair dismissal.

In April 2012 the service qualification required to be able to claim unfair dismissal increased to 24 months. Employees now have to gain two years’ service qualification in order to gain the protection of the unfair dismissal legislation. The increase in the qualifying period for unfair dismissal claims only applies to those starting a new job on or after 6 April 2012.

Employees whose employment started before 6 April will remain subject to the one-year qualifying period. This means that someone with 18 months’ continuous employment on 6 April will not lose his right to claim unfair dismissal, and an employee with 11 months’ service on that date will still only have to wait one month before being able to claim.

The date on which an employee starts work is included when computing the period of continuous employment for the purposes of unfair dismissal.

Note that the following cases were brought under the previous service qualification requirements, which were one year. However, they demonstrate the legal principles.

Example

In this case, O’B started her employment with the employer, PJ, on 8 April 2002. The employee received a letter on 31 March 2003, giving her one week’s notice, thus making 7 April 2003 her effective date of termination. When she lodged an unfair dismissal claim, PJ argued that she had not completed the requisite one year’s service period and therefore was not entitled to bring the claim.

When computing time for unfair dismissal claims, a ‘month’ means a calendar month and a ‘year’ means 12 calendar months. A calendar month runs from the date in one month to the corresponding date in the succeeding month. PJ argued that one year’s service would have been completed by the end of 7 April 2003.

The employer appealed, arguing that one year’s continuous service would not be accrued until 8 April 2003. The Court of Session disagreed, holding that the first day of work and the effective date of termination must be included in the calculation and on that basis, O’B had a year’s continuous service and her claim was in time.

If an employee is dismissed in breach of contract because he has not been given sufficient notice, there is no right to claim damages on the basis that had he been given his contractual notice, he would have been employed for more than a year and thereby entitled to claim unfair dismissal.

Example

H was summarily dismissed on 2 March 2001, 33 days short of the one-year qualifying period needed to bring a claim for unfair dismissal. Her employment contract specified three months’ notice. She brought a successful claim for wrongful dismissal, and the tribunal awarded three months’ salary as damages, being the notice period that H should have received.

The tribunal also awarded a further sum for ‘loss of opportunity to claim unfair dismissal’. VN appealed against the award. The EAT upheld its appeal, ruling that such an award was not available as a matter of law. H appealed unsuccessfully.

There was no right to claim compensation for loss of an opportunity to claim unfair dismissal, and therefore the tribunal had been wrong to award damages under this head. Parliament had stated that a worker does not have the right to claim unfair dismissal unless they have one year’s continuous service. The effective date of termination (EDT) can only be postponed by reference to statutory notice procedures.

Automatic unfair dismissals

Some dismissals can be described as automatically unfair in the sense that, if one of those reasons is established, a tribunal must find the dismissal unfair. In other claims of unfair dismissal, the court has to consider the two-stage question – see above.

The following is a list of automatically unfair dismissals.

  1. Dismissal for reasons relating to jury service
  2. Dismissal in connection with the right to time off for dependants
  3. Dismissal linked with pregnancy, childbirth or family leave
  4. Dismissal for health and safety reasons
  5. Shop or betting industry employees who object to working on Sundays
  6. Dismissal relating to paid annual leave and other rights under the Working Time Regulations
  7. Dismissal related to an employee acting as an occupational pension scheme trustee
  8. Dismissal for asserting a statutory right: for example, taking emergency leave for dependents
  9. Dismissal in connection with the right to request flexible working
  10. Dismissal because of a spent conviction under the Rehabilitation of Offenders Act 1974
  11. Dismissal in connection with trade union membership, activities or use of union services. Dismissal in connection with an application or campaign for trade union recognition or the securing of bargaining arrangements. Dismissal for taking official industrial action
  12. Where an employee is dismissed for acting as an employee representative or the person was a candidate to become an employee representative
  13. Dismissal relating to an employee asserting their rights under the Employment Relations Act 1999 – the right to be accompanied to a disciplinary or grievance hearing
  14. Dismissal relating to an employee asserting their rights under the National Minimum Wage Act 1998
  15. Dismissal relating to an employee asserting their rights under the Tax Credits Act 1999
  16. Dismissal relating to an employee asserting their rights under the Part Time Employees (Prevention of Less Favourable Treatment) Regulations 2000
  17. The selection of an employee for redundancy based upon a reason which would have been automatically unfair if the same reason was used to dismiss the employee
  18. Dismissal where there is a transfer of an undertaking and the transfer or a reason connected with it is the reason or principal reason for the dismissal
  19. Dismissal relating to the performance or functions of or activities as a member or representative of a European Works Council
  20. Dismissal in connection with the rights of fixed-term employees
  21. Dismissal in connection with the information and consultation rights under the Information and Consultation Regulations 2004
  22. Dismissal for making a protected disclosure under the Public Interest Disclosure Act 1998 (whistle-blowing)

Different rules for automatic unfair dismissals

Where an employee is dismissed or selected for redundancy for an automatically unfair reason, the two-year service qualification does not apply.

There are two exceptions to this:

  1. Dismissals because of a spent conviction
  2. Dismissals where there is a transfer of an undertaking.

There is no upper limit on the compensatory award in cases where the employee was dismissed for

  • Making a protected disclosure
  • Carrying out or proposing to carry out activities in connection with or reducing risks to health and safety at work, having been designated by the employer to do so
  • Performing or proposing to perform the functions of a health and safety representative or member of a committee, either in accordance with arrangements established by statute or after being recognised as such by the employer.

The ‘no upper limit’ rule also applies if the employee was selected for redundancy and the reason for the selection was one of the above reasons.

Limitation period

Claims for unfair dismissal and constructive unfair dismissal must normally be lodged with an employment tribunal within three months of the effective date of termination (EDT).

The three months start to run in the following circumstances:

  • Where the employer serves notice to the employee, the EDT is the same day that the notice period ends. It does not matter if the notice period is worked through or not or even whether the employer actually gives the correct amount of notice
  • If an employee is dismissed summarily – in other words, without notice – the three months run from the date of the dismissal. Dismissal without notice usually only happens when the employee commits gross misconduct, such as theft or assault
  • Where the employer does not serve notice on the employee but dismisses him without requiring him to work his notice, paying him for the notice period instead (pay in lieu of notice), the three months period runs from the date of dismissal.

Note that difficulties can sometimes arise for employers where they wish to communicate a dismissal to an employee who is absent from the workplace (for example, because of sickness or absence without leave). The problems associated with dismissal by post were considered in the case of Gisda Cyf v Barrett.

Example

Miss Barrett was informed that she had been dismissed by her employer by way of a recorded delivery letter. The letter informed her that she had been summarily dismissed for gross misconduct.

Miss Barrett lodged a claim for unfair dismissal with the Employment Tribunal, but the employer claimed that she was outside the three month time limit for bringing a claim. The employer claimed that the date of termination was the date when the dismissal letter was written and posted. Miss Barrett claimed that it was the date that she actually opened the letter and became aware that she had been dismissed.

The Supreme Court has decided that where a dismissal is communicated by way of a letter sent to the employee at home, provided that the employee had neither gone away deliberately to avoid receiving the letter nor avoided opening it and reading it, the effective date of termination of employment – and thus the date from when the three month time limit starts running – is when the letter is actually read by the employee, not when it is posted or even when it arrives in the post.

The EDT can sometimes be extended. For example, when an employee is summarily dismissed one week before the two years’ continuous employment comes into effect. However, the EDT will not be extended if the summary dismissal is justified. The employment tribunal will look to see if summary dismissal is justified. This extension can also be used in constructive dismissal cases.