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Dismissal

29 April 2005 by
Dismissal

The Employment Rights Act 1996 provides employees with a general right not to be unfairly dismissed.

In addition to these statutory rights, the employee may also have a right to bring a claim if the dismissal is in breach of their contract of employment. This is defined as wrongful dismissal.

What notice do I have to give before dismissal?

The contract of employment will usually specify the period of notice to be given to terminate the contract.

If no notice period is specified, the employee must be given "reasonable" notice. When deciding what is reasonable, courts will take into account:

  • Seniority
  • The employee's pay
  • Age
  • Length of service
  • What is usual in the particular trade.

As a very rough guide, two weeks or one month might be appropriate for, as an example, waiting staff; three months for a head chef or middle management; and between three months and a year for more senior managers.

The law does state several statutory minimum periods of notice:

  • One week, if employed for more than one month but less than two years
  • An employee who has been continuously employed for two years but less than 12 years is entitled to one week's notice for each year of continuous employment
  • An employee who has been employed for more than 12 years is entitled to not less than 12 weeks' notice.

When can I be taken to an employment tribunal?

An employee can bring a claim in the employment tribunal for either:

  • compensation for unfair dismissal
  • damages for wrongful dismissal (eg, breach of contract by failing to give adequate notice).

What's unfair dismissal?

When a claim for unfair dismissal is made, the tribunal will take a two-stage approach:

  • The employer must show the reason for the dismissal was one of the five potentially fair reasons (see below)
  • If proved, the tribunal must then consider whether the employer acted reasonably in dismissing the employee for that reason.

What are fair reasons for dismissal?

The five potentially fair reasons for dismissal are:

  • The employee's capability or qualifications are in doubt for the job they were employed to do
  • The conduct of the employee is below expectations
  • The employee was made redundant
  • The employee could not continue to do his or her job without contravening a duty or restriction imposed by law
  • Some other substantial reason that justifies the dismissal of an employee.

How do I know if I'm being "reasonable"?

It is very important to follow a fair procedure and, if there is an agreed disciplinary procedure, this must be followed. Any disciplinary hearing must conform to the principles of natural justice:

  • The employee should be given an opportunity to state their case
  • The employee should know the nature of the allegations against them
  • The disciplinary tribunal should act in good faith.

The employee has a statutory right to be accompanied by a work colleague or trade union official to a disciplinary or grievance hearing.

Click here for information on how the Employment Act 2002 (Dispute Resolution) Regulations 2004 affect the dismissal procedure.

Here's a summary of the questions you should ask yourself to decide if you've been "reasonable" when dealing with a dismissal:

  • Have you followed your company disciplinary procedures in full?
  • Have you followed the best-practice guidelines contained in the ACAS Code of Practice on Disciplinary Procedures and Grievances?
  • Has the employee been made fully aware of the case against them, been given a full opportunity to state their case, and been given an opportunity to challenge evidence - ie, have the rules of natural justice been observed?
  • Have you conducted the most thorough investigation possible?
  • Where facts are disputed, have you reasonable grounds, based on a thorough investigation, to show which version you genuinely believe to be true?
  • Other than in cases of gross misconduct or gross incompetence, can you show that there are warnings on record stating that a failure to improve will lead to dismissal?
  • Have you taken into account the employee's length of service, age, position and previous record?
  • Have grievances raised in the past been dealt with properly, demonstrating that complaints have been fully investigated and treated seriously within agreed procedures?
  • Have you taken any mitigating circumstances into account, eg, reasons relating to disability, health, personal problems, work-related problems, ignorance of the rules, etc?
  • Have you taken into account the penalty applied in similar circumstances in the past?
  • Where appropriate, can you show that you have looked for alternative employment - or considered reasonable adjustments in cases of disability - particularly given the size of the company and the number of different jobs or resources available?
  • Given (a) the nature of your business, (b) the facts of the case, and (c) the employee's position, is the decision to dismiss within the range of reasonable responses that a reasonable employer could make in your position? In other words, does the penalty fit the crime?
  • Have you allowed the employee to exercise the right of appeal, and can you prove that the process was handled fairly in an impartial and unbiased manner? The handling of the appeal process has just as much bearing on the fairness of the dismissal as the actual decision to dismiss itself and can affect compensation awards.

Are there any special areas to look out for?

The following areas are automatically unfair reasons for dismissal:

  • Membership/non-membership of a union or taking part in union duties/activities
  • Being a candidate for, or acting as, an elected employee representative for collective consultation regarding redundancies or business transfers
  • Acting as a trustee of an occupational pension scheme
  • Pregnancy, childbirth, or exercising maternity rights
  • Parental leave or emergency family leave
  • Because of sex or race (but not disability, which can be justified)
  • In connection with a right under the Working Time Regulations 1998 (see article on working hours)
  • In connection with a right under the National Minimum Wage Act 1998 or the National Minimum Wage Regulations 1999 (see article on minimum wage)
  • For certain health and safety activities
  • Asserting a statutory right
  • Being selected for redundancy for any of the automatically unfair reasons stated above
  • Dismissal directly related to a business transfer, unless it was for an economic, technical or organisational reason (see article on TUPE)
  • Because of a spent conviction under the Rehabilitation of Offenders Act 1974.

Do people have to have worked for me for a minimum period before they can claim?

In order to bring a claim for unfair dismissal in a tribunal the employee must have at least one year's continuous employment under a contract of service to qualify, unless the dismissal is for an automatically unfair reason (see above). There is no service requirement for a claim of wrongful dismissal.

What about ill-health?

When absence becomes commercially damaging, it may be necessary and reasonable to dismiss the employee concerned after due warnings. Provided that the correct procedure is followed, the dismissal is likely to be fair.

Here is a summary of what you must consider before dismissing a worker on the grounds of ill-health:

  • Conduct a fair review of the sickness record, including the length of absences and the periods of good health between them
  • Evaluate the impact of the absences on other employees, together with the damage to service and efficiency
  • Consult with the employee throughout, listening to any explanations put forward, and explore different working arrangements
  • Obtain medical evidence about the nature of the problem where there is a single underlying medical condition or where there are unconnected but fairly serious ailments
  • Ensure that it is clearly established whether or not the "impairment" places the person within the definition of a disabled person under the Disability Discrimination Act (see article on disability discrimination)
  • Assess the likelihood of an improvement to health or attendance in the immediate future
  • Formally warn the employee that unless attendance improves within a specified reasonable period, their continued employment is at risk
  • Explore the possibilities of suitable alternative employment or reasonable adjustments before taking any final decision to dismiss.

How much compensation am I liable for?

Compensation for unfair dismissal is awarded under the following definitions:

Basic award. This is calculated in units of a week's pay and will usually depend on an individual's age, length of service and level of pay. The minimum possible basic award is £270 (the figure used in calculations as the maximum week's pay) and the maximum is £8,100.

If an individual is dismissed for certain inadmissible reasons (trade union membership, certain health and safety activities, acting as a trustee for an occupational pension scheme, or a dismissal that contravenes the Working Time Regulations) there is a minimum basic award of £3,100.

Compensation awards. These are calculated on the basis of what is just and equitable. Matters considered are:

  • Loss of earnings between the dismissal and the date of the hearing at which the tribunal decides on compensation
  • Estimated loss after the hearing, ie, future loss
  • Expenses incurred as a consequence of the dismissal
  • Loss of statutory employment protection rights
  • Loss of pension rights.

The statutory maximum award is £55,000. This award can be reduced by the employee failing to mitigate his or her loss.

Supplementary rewards or reductions. These can be made where the employer or employee failed to take advantage of an appeals procedure.

Additional awards. These must be made where an employer fails to comply with a reinstatement order (see below).

Special note: There are no limits on compensation involving sex, race and disability discrimination dismissals.

Reinstatement

Following a finding of unfair dismissal, an employment tribunal is required to explain to the complainant that an order for reinstatement can be made. If the complainant asks for reinstatement, the tribunal must consider whether it would be practicable for the employer to comply. An employer can address the tribunal as to whether or not this would be practicable.

by Jonathan Exten-Wright
Jonathan Exten-Wright is a partner in the employment department of lawyers DLA.

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