As an employer, sometimes having to dismiss an employee is unavoidable. It’s not pleasant for both parties, but some people just aren’t compatible with an organisation.
However, there are correct ways of doing things. An employer will need a fair reason for the dismissal, and follow their formal disciplinary process first. If you don’t follow the correct procedure, a sacked employee could claim unfair dismissal even if you have a completely valid reason for letting them go.
What is unfair dismissal?
So apart from not following procedure, what constitutes unfair dismissal? A dismissal will be considered ‘automatically unfair’ if it relates to an employee exercising rights to do with:
Women cannot be dismissed for becoming pregnant
Family reasons including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants
Representation, including acting as an employee representative
Trade union membership and union recognition
Being a part-time or fixed-term employee
Pay and working hours including the Working Time Regulations, annual leave and the National Minimum Wage
An employee will require two years of service before they are eligible to bring a claim for unfair dismissal. This period of service is known as the ‘qualifying period’ and does not apply to discrimination claims.
If you somehow get the procedure wrong, or accidentally dismiss someone for an automatically unfair reason, there’s a good chance your former employee will recognise this and submit a claim to an employment tribunal.
If this happens and the tribunal agrees with the employee, there are a couple of possible outcomes.
The tribunal may give you some time to come to an agreed settlement with the employee. The average compensation payment of £4,000 generally isn’t enough to cover legal costs, so settling with an apology, reference and smaller payment may be better to allow both parties to continue with their lives. However, the admission of guilt from an employer’s point of view may not be ideal and lead to other claims in future.
The tribunal will order you pay the employee a fixed amount. The sum will depend on the case, with discriminatory cases leading to the largest pay outs. This will happen if a settlement cannot be agreed, and may require a further hearing along with the costs that this will accrue.
The other outcome is that you win. Be aware though that only 19% of employers win in the 40,000 unfair dismissal cases each year. There is an 81% chance that the employee will be able to claim some money from you.
The easiest way to avoid the cost and inconvenience of a tribunal is to simply get it right first time and dismiss the employee fairly.
When is a dismissal fair?
Dismissal is normally fair if an employer can show that it is for one of the following reasons:
A reason related to an employee’s conduct
A reason related to an employee’s capability or qualifications for the job
Because of a redundancy
Because a statutory duty or restriction prohibited the employment being continued
Some other substantial reason of a kind which justifies the dismissal.
How can unfair dismissals be avoided?
The employer must show that they acted reasonably in treating that reason as sufficient for dismissal. This can be achieved by following the Acas Code of Practice, which an organisation’s disciplinary policy should be based on.
If the employer is found not to have followed the code, the employee’s award at a tribunal could be up to 25% more than if they had.
Employees should be made aware of disciplinary rules so they know the standards required of them. This could be made available in an employee handbook, either written down or available online.
Doing so makes it clear what constitutes disciplinary action, and draws a clear line between acceptable and unacceptable behaviour. A claim of unfair dismissal is harder to prove if the rules are known, easy to find, and the employer has followed their procedure accordingly.
It can also pay to try to resolve a situation before it gets out of hand. Talk to an employee informally at first, there may be an easier solution than disciplinary action. Plus, other employees may feel the same.
Unfair dismissal should not be confused with wrongful dismissal. Wrongful dismissal is a dismissal in breach of the employee’s contract and usually applies where the employer has terminated employment without notice. The value of a wrongful dismissal claim is usually limited to the pay and benefits the employee would have received during the notice period provided by the employment contract.