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Fair and unfair dismissals
Written on 4 January 2023
When it comes to dismissing an employee, there are right and wrong ways to go about it. Get it wrong, and you could find yourself in an Employment Tribunal.
With the average award for unfair dismissal sitting at £10,812, missteps can be costly. It’s therefore essential that employers understand what a fair dismissal process looks like, what might constitute unfair dismissal, and what dismissals are considered automatically unfair.
What is a fair dismissal?
The key ingredients to a fair dismissal process are:
- Having a valid reason to dismiss; and
- Acting reasonably in the circumstances.
In relation to the first criteria, the Employment Rights Act 1996 lists five potentially fair reasons for dismissal. These are:
- Dismissal related to an employee’s conduct (e.g. theft, fraud, bullying or negligence). 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.
- Dismissal related to the employee’s capability or qualification for the role (e.g. long-term sickness absence or performance concerns).
- Redundancy (e.g. business closure).
- Dismissal because of a statutory restriction, i.e. if continuing to employ the person would break the law, such as a driver losing his driving licence.
- Dismissal for some other substantial reason. This is a ‘catch-all’ category that employers may rely upon if none of the other potentially fair reasons for dismissal apply (e.g. the 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).
From a legal standpoint, however, it’s not enough that the employer has a valid reason to dismiss; you must also be able to demonstrate that you acted reasonably in the circumstances.
What is a fair dismissal procedure?
While there is no legal definition of ‘reasonableness’, in determining whether a dismissal was fair, an Employment Tribunal will consider a number of factors, including whether the employer:
- Properly investigated the issues and considered mitigating circumstances;
- Informed the employee of the issues in writing and notified them of the potential for dismissal;
- Conducted a disciplinary hearing with the employee to give them an opportunity to respond;
- Allowed the employee to be accompanied at any hearings;
- Informed the employee of the decision to dismiss in writing; and
- Gave the employee the 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?
- Whether the employer set clear standards of conduct and performance;
- Whether the employee could be expected to understand the consequences of their behaviour; and
- Whether the employer’s policy has been applied consistently and fairly; how were similar offences dealt with in the past?
It’s important to note that even if the employer follows a fair dismissal procedure, the employee may have certain characteristics that still render the dismissal unfair.
What makes a dismissal unfair?
A dismissal will be considered unfair if:
- The reason for dismissal 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.
In cases of misconduct or performance concerns, employers should follow the procedures set out in the Acas Code of Practice on Disciplinary and Grievance Procedures, as an Employment Tribunal will take this into account when assessing whether an employer has acted reasonably.
If it is found that an employer has unreasonably failed to follow the relevant procedure in the Code, a Tribunal may consider that the dismissal is unfair.
Likewise, in redundancy situations, the main elements to a fair redundancy process are:
- Warning employees of redundancies;
- Creating and applying fair and non-discriminatory scoring criteria; and
- Consulting with employees and exploring suitable alternative employment options.
If you fail to follow a fair selection or consultation process, you may find that the dismissal is deemed unfair.
An employee with at least two years’ service may be able to submit a claim to a Tribunal for unfair dismissal. Claims must generally be submitted within three months of the date the employee’s employment was terminated.
What is automatic unfair dismissal?
In some cases, dismissal will be automatically unfair.
By law, employers cannot dismiss an employee, or select them for redundancy, if the main or sole reason for their dismissal is that they are pregnant, on maternity or paternity leave, or exercising any of their statutory rights in respect to this.
Likewise, it is automatically unfair to select or dismiss an employee for any reason connected to them:
- Making a protected disclosure (whistleblowing);
- Refusing to work or undertake certain duties due to health and safety concerns;
- Trying to assert a statutory employment right (such as refusing to perform certain activities that would breach the Working Time Regulations);
- Having part-time status;
- Participating in trade union activities, including taking part in industrial action or acting as an employee representative; or
- Requesting to work flexibly.
In normal circumstances, employees must have two years’ service to bring a claim for unfair dismissal. However, in cases of automatically unfair dismissal, the usual time constraints don’t apply. Therefore, if any of the above apply, an individual can usually bring an unfair dismissal claim irrespective of length of service, and regardless of whether you have acted reasonably or not.
What’s more, because employers cannot justify or defend a dismissal which is automatically unfair, it is significantly easier for an employee’s claim to succeed. And, unlike ordinary unfair dismissal, there’s no maximum compensation limit if the dismissal is automatically unfair, greatly increasing financial risk to employers.
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Get dismissal right: speak to a professional
Dismissal is often more complicated that employers expect, and given the legal complexities involved, the potential for missteps is high.
If you’re looking for advice on how to dismiss staff fairly, want to understand the potential risks, or would like step-by-step guidance through the disciplinary and dismissal process, our Employment Law and HR experts can help you to act in accordance with best practice and the law.
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