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Wrongful vs. unfair dismissal

• Employer has the right at common law to terminate an employee’s contract by giving proper notice (or a payment in lieu). Failure to give proper notice is a ‘ wrongful dismissal ’ for which an employee can sue for damages – fairness or otherwise is not an issue. Also there’s no qualifying period of employment or age limit. If an employer wrongfully dismisses an employee it will normally lose the benefit of any special clauses in the contract, e.g. restrictive covenants.
• Unfair dismissal is a creature of statute law. Unfair dismissal may occur, and commonly does, even where there is no breach of contract, i.e. the employer has given proper notice. To complain of unfair dismissal, there are a variety of conditions an employee has to meet (see ‘ Qualifying for unfair dismissal ’).

What is a dismissal?

• For unfair dismissal purposes the law defines dismissal as where:
  • an employee’s contract is terminated with or without notice
  • the employee resigns claiming that the employer’s conduct has left them no alternative – usually called constructive dismissal. Here 3 elements must be present: the employer must have breached either an express or implied term of the contract; the employee must have left as a consequence; and there shouldn’t be a significant delay between the breach and the employee leaving
  • a temporary (fixed-term) contract comes to an end without its renewal

Other ways an employment contract may end

• Apart from dismissal, an employment contract may end in a number of other ways, including resignation, mutual agreement, and frustration.

Resignation

• Once an employee has resigned and an employer has accepted that resignation, the employee can't unilaterally withdraw it.
• Resignations don't have to be in writing but it's good practice to ask the employee to confirm a resignation in writing.
• Avoid taking words of resignation spoken in the heat of the moment at face value. Allow time for the employee to calm down.
• Don't pressure an employee into resigning as this may amount to an actual dismissal.

Mutual agreement

• The mutual consent of both parties can bring an employment contract to an end without there being a dismissal in law.
• But tread very carefully here as tribunals will expect to see clear evidence that the agreement is in fact mutual.

Frustration

• An employment contract may be frustrated 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 or radically different from that originally contemplated. Frustration automatically ends the contract – there’s no dismissal in law and so no need for notice to be given by either party.
• Tribunals are however VERY reluctant to find that a contract has been frustrated. Two types of event can amount to frustration: a devastating illness or a prison sentence.
• Where prison is concerned, staff sentenced to relatively short terms may be able to argue that there is no frustration if the employment contract allows for other absences of a similar duration, e.g. for long-term sickness. Where an employee has been bailed, this will not necessarily amount to a frustrating event – it is the conviction that is important.
• Where illness is concerned, it must be a really serious condition (permanent incapacity) with no prospect of recovery.

Summary dismissal

• Summary dismissal is termination without giving the required notice.
• This is still perfectly possible, even with our draconian laws, but it is something that should be reserved for gross misconduct.
• Defining gross misconduct is difficult – a good yardstick is whether the conduct fatally undermines the relationship of trust and confidence that exists between the employer and employee.
• It's impossible to list what amounts to gross misconduct in every case but an employer’s disciplinary procedure should include examples of the types of conduct that would normally warrant summary dismissal. Make it clear that any list is not exhaustive and illustrative only.

Notice

• The legal minimum periods of notice to which an employee is entitled are:
  • 1 week’s notice if he/she has worked for between 1 month and 2 years
  • 1 week for each year if he/she has worked for between 2 and 12 years – up to a maximum of 12 weeks’ notice if he/she has been employed for 12 years or more.
• Contractual notice may well be more than these legal minimum periods, but cannot be less. Employers can stipulate whatever notice they want from the employee. If the employee doesn’t give the required contractual notice, in practice there is not a lot the employer can do.

Qualifying for unfair dismissal

• The employee must actually have been dismissed (see ‘ What is a dismissal? ’)
• An employee generally needs 1 year’s continuous employment to qualify for the right not be unfairly dismissed (but see ‘ Automatically unfair dismissals ’)
• He or she must not be over the normal retiring age for the business.
• He or she must actually be an employee and not, for instance, self-employed.

Fair dismissal

• For a dismissal to be fair a tribunal will need convincing of 2 things: that the employer had a fair reason to dismiss and that the employer acted reasonably.
• All employers must now follow a statutory minimum procedure before dismissing an employee (see ‘ Disciplinary and grievance procedures ’)
• There are 5 potentially fair statutory reasons for dismissal: capability or qualification; conduct; redundancy; statutory bar; and some other substantial reason.

1. Capability

• A ‘capability’ dismissal relates ‘skill, aptitude, health or any other physical or mental quality’.
• A poor sickness record can justify dismissal but an employer will usually be expected to show that it tried to establish the employee’s medical condition and that alternatives to dismissal were considered. Note that if the employee is ‘disabled’ under the Disability Discrimination Act extra protections come into play, chiefly the duty on the employer to make ‘reasonable adjustments’.
• If the dismissal is on the grounds of skill or aptitude, the employer would be expected to have given warnings, stated the standards of work required and the consequences of failing to meet them. Considering transfer to another job might also be appropriate.

2. Conduct

• A ‘conduct’ dismissal is really one based on the employee’s misconduct.
• Employers must make clear to staff what they see as misconduct.
• Disciplinary rules and procedures must be clear, well known and applied consistently.
• The following standards are essential where misconduct dismissals are involved:
  • the employer must have a genuine and honest belief in the reason for dismissal
  • the employer must have reasonable grounds in his mind for believing that the offence was committed, and
  • the employer must carry out as fair and thorough an investigation into the matter as is reasonable in all the circumstances.
• Dismissal for a single act of misconduct will only usually be fair in very serious cases.
• Misconduct outside work may be fair but only if it relates in some way to work – the mere fact that an employee has been charged with an offence will not usually justify dismissal without an investigation.

3. Redundancy

• Dismissal for a genuine redundancy will usually be regarded as fair but there are circumstances which could make it unfair:
  • the selection process is flawed
  • there is no consultation or warning prior to notice of dismissal
  • there is no attempt to seek suitable alternative employment
• See ‘ Redundancy ’ for further information.

4. Statutory restriction

• Where an employer would be breaking the law in employing someone, then it is potentially fair to dismiss for such a reason.
• A common example is that of a driver who has lost his licence through ill health or as a result of being banned, or a foreign national who did not have the necessary work permit.

5. Some other substantial reason (SOSR)

• Not all dismissals can be fitted neatly into the categories of conduct, capability, redundancy and statutory restriction.
• Therefore the law recognises another sort of ‘catch-all’ category of ‘some other substantial reason’.
• An SOSR reason can include dismissals for such things as persistent short-term absenteeism, expiry of a temporary contract, reorganisation of a business, customer pressure, imprisonment, lying on application forms, or personality conflicts

Automatically unfair dismissals

• There are some dismissals that are automatically unfair, no matter what reasons the employer gives.
• As the scope of employment law continues to impose more restrictions on an employer’s right to dismiss, the list of these protected dismissals will continue to grow.
• The importance of this category of dismissals is that an employee does not usually need any minimum period of service to qualify for protection – he or she is protected from Day 1 of employment if a dismissal is made for one of the following reasons:
  • because of pregnancy, maternity, or for a reason connected with pregnancy
  • because an employee wanted to exercise his/her rights to parental, paternity or adoption leave
  • because a business is being sold or transferred
  • on grounds of trade union membership or taking part in union activities
  • because of participation in lawfully organised industrial action
  • because the employee tried to enforce various legal rights, e.g. a claim for unfair dismissal, rights under the Working Time Regulations, a right to minimum notice, etc.
  • because the employee was carrying out their function as a safety representative, employee representative, pension scheme trustee, union official, workforce representative
  • for making what is called a ‘protected disclosure’ under the whistleblowing law
  • for exercising the right to be accompanied at a disciplinary or grievance hearing
  • for alerting their employer to health and safety risks
  • for exercising rights under the regulations on part-time workers or fixed-term employees
• It is also automatically unfair to dismiss someone on the grounds of sex, marital status, gender reassignment, race, colour, nationality, national or ethnic origins, disability, sexual orientation or religion – and there is no upper limit on the amount of compensation that can be awarded in such cases.

Disciplinary and grievance procedures

• Every employer must follow a statutory minimum procedure before dismissing an employee or imposing some other form of disciplinary penalty (other than issuing a warning or suspending on full pay).
• The disciplinary procedure applies to most dismissals including those based on conduct, capability and redundancy (except where a group of staff are being made redundant and it is being dealt with through consultation with worker reps).
• If an employer dismisses without following the new procedure, the resulting dismissal will be automatically unfair and a tribunal can increase an employee’s compensation by between 10% and 50%. Conversely, if an employee fails to follow the required steps, his or her compensation can also be reduced by the same percentages.
• Employers must note that following the new procedure does not, of itself , necessarily make a dismissal fair. The new procedures are in addition to the existing concepts of fairness so a tribunal will also look at whether the employer acted reasonably in all the circumstances, taking into account its size and administrative resources. It will also – and this is important – look at whether the employer followed the guidance in the ACAS Code of Practice Disciplinary and Grievance Procedures.
  
  Disciplinary procedure
  
• Step 1 – Write to the employee giving details of the circumstances which may result in dismissal or disciplinary action.
• Step 2 – Ask the employee to a meeting to discuss the matter (he or she has the right to be accompanied). After the meeting, notify the employee of the decision and offer a right of appeal.
• Step 3 – If the employee wants to appeal, hold a further meeting. Notify the employee of the final decision.
• The above 3-stage procedure can, where for instance an instant dismissal might be justifiable, be shortened to a modified 2-stage procedure. But best advice is to use the 3-stage procedure in all cases if possible.

Grievance procedure

• Step 1 – Employee writes to the employer setting out the grievance.
• Step 2 – Employee is asked to a meeting with the employer to discuss the matter. He or she has the right to be accompanied. Employee should be notified of the decision in writing afterwards.
• Step 3 – Employee is given the right of appeal and, following an appeal meeting, must be notified of the final decision.
• Before making a tribunal claim based on a grievance, an employee must, at least, have raised the grievance in writing with the employer and waited a further 28 days. If he or she doesn’t do this, the claim will automatically be rejected.

Right to be accompanied

• All workers have the right to be accompanied by a fellow employee, a union official or a representative of their choice during disciplinary and grievance hearings.
• The right is triggered upon a reasonable request from the worker.
• A disciplinary or grievance hearing is one which could result in a formal warning or the taking of some other action by the employer (e.g. demotion).
• The right to be accompanied applies only to hearings/meetings which may lead to serious action being taken against the employee – therefore purely investigatory meetings whose aim is simply to gather information or establish facts would not attract the right.
• Where a companion cannot attend the hearing on the date first proposed, the worker can suggest an alternative time and date which is reasonable and is within 5 working days of the original date.
• The companion can address the meeting to put or sum up the worker’s case, respond on his or her behalf, and confer with the worker during the hearing – but he or she cannot answer questions on the worker’s behalf.

Written statement of employment particulars

• All new employees (including full-time, part-time and temporary staff) whose employment is for 1 month or more are legally entitled to a written statement specifying the principal terms and conditions of their employment.
• This statement is NOT a contract of employment - but it's often the best evidence of the terms of the contract should a dispute arise.
• The written statement must issued within 2 months of the date when the employee started work (even if the employee resigns or is dismissed before the end of this 2-month period).
• If any of the particulars in the statement change, the employee must be informed in writing within 1 month.
• Business Link has an interactive web tool for producing written statements.

Sources of further information

Business Link guidance

• Dismissals, Redundancies and other Exits
• Disciplinary Problems, Disputes and Grievances