19 FAQs people ask about dismissing employees
Depending on the circumstances, any of the following claims — alone or in combination — might be brought against you:
Either may be a breach of contract, so your employee may be able to claim damages, calculated so as to put them in the position they would have been if the breach had not occurred (ie salary payable during the notice period, plus an amount equivalent to any benefits due during the same period – although employees have a duty to mitigate by looking for a new job and, if they find one, their compensation is reduced accordingly). If they believe they are entitled to more than an Employment Tribunal can award in such cases (currently £25,000), they can take the claim to a civil court.
If an Employment Tribunal finds against you in an unfair dismissal claim, you might have to pay compensation, which includes both a basic award and a compensatory award. Under new rules the basic award is £14,250 and the compensatory award is capped up to a maximum of either £78,335 or one year's gross pay and the fees which must be paid when an employment tribunal case is presented - whichever is the lower. The new cap will apply where the ‘effective date of termination’ (the date on which the employee’s notice expires, where employment has been terminated with notice) or the date on which termination takes effect (where employment has been terminated without notice) is after 29 July 2013. In reaching its decision, the Tribunal will look at both the reason for the dismissal, and the manner of it.
Alternatively, an employee might ask for either reinstatement (to the old job, as though they had not been dismissed), or re-engagement (to a different job with the same employer, or a successor or associated employer). In either case, their employment must be treated as continuous – ie as though they had not been dismissed at all.
There is no minimum service requirement, and there are no upper limits on the amount of the award in these cases. An employee who wins on a discrimination claim might also be entitled to compensation for injury to feelings (currently capped at £25,000).
Employees can also bring claims against individuals, which could include you and your directors and managers.
Ensure that there was a 'fair' reason for the dismissal, and that you acted reasonably in dismissing for that reason. There are only five potentially fair reasons which lawfully justify dismissal, and if you want to prevent a disgruntled employee from bringing an unfair dismissal claim, you must be able to establish at least one of these. The reasons are:
You must also be able to establish that you followed fair procedures (see 3). You should have and follow a fair and reasonable disciplinary procedure, including in cases of gross misconduct.
Your disciplinary and grievance procedures must be fair and reasonable - there is an Acas Code of Practice to help you achieve this. An unreasonable failure to comply with the Code means an Employment Tribunal can increase any award against you by up to 25% (or reduce it by up to 25% if the failure is by the employee). This is subject to a new statutory cap (see 1) and a minimum basic award of four weeks' pay, except in discrimination cases, where there is no statutory cap.
You need to demonstrate that you have been fair and reasonable in your treatment of any employee subject to disciplinary action. There is an Acas Code of Practice to help you. If you unreasonably fail to follow the Code of Practice it means an Employment Tribunal can increase any award against you by up to 25% (or reduce it by up to 25% if the failure is by the employee). Your procedures should at least include:
Employers and employees should always try to resolve disciplinary issues and grievances within the workplace. Where this is not possible, employers should consider using an independent third party to help resolve the issue. This could be an internal or external mediator. Acas has powers to conciliate in disputes.
It is advisable to do so. It is particularly important that employees have an opportunity to state their case at a meeting.
Do not assume that you can afford to be more casual with employees with less than two years' service. They are entitled to the same disciplinary standards (for example, a written statement of the problem, a meeting, and an opportunity to appeal) as everyone else.
They will not usually be entitled to sue for unfair dismissal because of an unreasonable failure to comply with the Acas Code of Practice, unless they have at least two years' service. However, they may be able to sue for unfair dismissal if one of the exceptions to the general rule requiring a minimum period of service applies (see 14), or if they sue for discrimination, where no minimum service requirement applies.
Poor timekeeping is likely to constitute either a performance or a misconduct issue, and both are potentially fair reasons for dismissal. But you must still apply a fair procedure, which might include regular appraisals (with timekeeping issues being addressed), early warnings, providing the employee with a timescale for improvement, and obtaining medical evidence if there is any risk that the problem has a medical cause.
If the reason for poor timekeeping is a disability, you may be obliged to make 'reasonable adjustments' to accommodate the employee, or you may be vulnerable to a disability discrimination claim.
Poor performance is one of the potentially fair reasons for dismissal. However, to demonstrate that you have behaved in a fair and reasonable manner you might well have to show you conducted regular appraisals (to identify weaknesses at an early stage), issued early warnings with a set time to improve, set realistic targets and if necessary offered training and/or supervision to address problem areas.
If the employee has knowingly misstated details about their qualifications or experience, this would be likely to count as ‘some other substantial reason’ to justify dismissal. However, if the qualifications are desirable rather than necessary, and particularly if the employee has been doing the job satisfactorily without them, it may be unfair to dismiss. So if you want and need an employee to have qualifications or a certain type of experience, make your job offer conditional on them, and check up on them before you confirm the employment.
As in any other disciplinary case, you need to ensure that your procedures are fair and reasonable and where it is reasonable to do so, that they follow the Acas Code of Practice (see 2) and that you observe the guidelines set out in 3.
It depends on the circumstances. If the employee is representing the company in dealings with customers or suppliers, or appropriate clothing is required for health and safety reasons, probably yes; if he or she is working behind the scenes, possibly no.
You need to think through your reasons for requiring particular forms of dress. Is it a legal or contractual requirement? What are the employee's reasons for objecting? How do you go about enforcing the requirement? Are you being discriminatory on the grounds of sex (for example by requiring men to wear a shirt and tie while women may wear T-shirts), or on the grounds of race, ethnic origin, religious belief or sexual orientation (for example, by requiring formal business dress and refusing to allow employees to dress according to their race, ethnic origin, religious belief or sexual orientation)?
Can your requirements be justified on either health and safety grounds or out of necessity to protect the reputation of an employer (for example, the need to wear a hat and hairnet for hygiene reasons in places where food is prepared, or the need to wear personal protective equipment such as a hard hat, steel toe-capped boots and a high-visibility jacket on a building site)?
In any case, follow normal disciplinary procedures before dismissing anyone.
Constructive dismissal arises when you as the employer commit a 'fundamental breach' of the contract of employment - so fundamental that it looks as though you no longer intend to be bound by an essential part of it. Such a breach entitles the employee to resign. It might arise, for example, if you cut an employee's pay, or made it very obvious that you were demoting or undermining a manager, or appointed someone to work in one place and then unilaterally demanded that they move to another.
In one case, an employer whose grievance procedures effectively stopped an employee from raising a grievance (because it required a meeting with the very line manager who was the subject of her grievance) was held to be in breach of its duty of trust and confidence to the employee and she successfully claimed constructive dismissal.
A change of function would not necessarily imply a fundamental breach in the employment contract, particularly if you had exhausted all other avenues in trying to help the employee improve their performance. Much would depend on the facts.
Before April 2009, any employee who made a complaint about constructive unfair dismissal to an Employment Tribunal was likely to have it blocked unless he or she had first raised the matter, in writing, as a grievance, and then waited at least 28 days for you to respond. That rule no longer applies, but an employee who unreasonably fails to follow your grievance procedure may find any award reduced by up to 25% in subsequent Employment Tribunal proceedings.
The remedies available to an employee who is claiming constructive unfair dismissal are:
If the employer/employee relationship has broken down, however, the employee is unlikely to ask for his or her job back, and will probably seek compensation (see 16).
Possibly. Incapability is one of the potentially fair reasons for dismissal. But first you need to consider whether the employee's ill health amounts to a disability under the terms of the Equality Act 2010. If so, you might need to show that your treatment of them was for reasons unconnected to their disability - unless such treatment could be justified because the reasons for it were material to the case, and substantial.
The Employment Appeals Tribunal has ruled that prolonged absence because of disability may be treated in the same way as prolonged absence because of sickness, but you would still need to show that the reason for the dismissal could not be removed by a 'reasonable adjustment' to the employee's working conditions - otherwise it is discrimination. If the employee suffers from long-term ill health, an Employment Tribunal would certainly expect you to do everything you can to keep him or her on, if necessary including an offer of alternative employment.
However, if - after consultation with the employee and a medical investigation - there is no prospect of the employee returning to work, and you cannot keep the position open indefinitely, you may be able to dismiss on the grounds of 'incapability' - even where, as recent cases before the Court of Appeal and Queen's Bench Division have indicated, the employee is entitled to substantial damages because that incapability has been caused by the employer's own failure to recognise the risk of breakdown caused by stress.
To avoid a successful claim for unfair dismissal, you must be able to show that you acted reasonably in treating the absence as a reason to dismiss, and that you acted fairly before dismissing. Take legal advice before you do anything.
Be careful. Even though your employee has been convicted of an illegal act, you should still carry out such investigations as are reasonable in the circumstances before making any decision. Such investigations must be carried out promptly to ensure that any dismissal is fair. If the employee's offence was related to his or her work, a dismissal would probably be fair on grounds of conduct.
Alternatively, the circumstances of the imprisonment might be such as to reflect adversely on the image of your business, and/or destroy trust and confidence in the employee, which might count as 'some other substantial reason' for dismissal. But, great care should be exercised and legal advice sought. The fact that the employee is in prison and therefore cannot do their job is not in itself enough: it may 'frustrate' the contract, but as a general rule Employment Tribunals are reluctant to decide that the contract of employment has ended because of the employee's inability to perform it.
No. If you sack someone for pointing out an imminent risk to health and safety, it is automatically deemed to be an unfair dismissal, regardless of his or her length of service. You should take the comments seriously, take such steps as are reasonable (for example, asking the opinion of the Health & Safety Executive), and ensure that your disciplinary procedure is followed.
There will automatically be a finding of unfair dismissal against you, if you sack anyone of any age or length of service for any of the following reasons:
There will also automatically be a finding of unfair dismissal against you if an employee can prove to an Employment Tribunal's satisfaction that you selected him or her for redundancy for any of the above reasons.
These are the main problem areas, although this list is not exhaustive. If you are considering dismissing anyone who might be able to attribute your action to any of the above causes, you are strongly advised to take legal advice first.
You cannot sack her for being pregnant but, in theory at least, the fact that she is pregnant should not stop you from sacking her for one of the five fair reasons (see 2). But be very careful. You need to be very certain that her behaviour cannot be attributed to the pregnancy (which might be a cause, for example, of poor timekeeping - because of morning sickness - or absenteeism), and you need convincing evidence of the behaviour for which you are considering dismissing her. Take advice.
You could bring a claim for breach of contract, but to succeed you would have to prove you had incurred financial loss because your employees did not work out their notice. Even if your claim was successful, your ex-employee might not be able to reimburse you for the loss and the legal costs you have incurred. Commercially, would it be worth it?
You will not have to give an employee pay in lieu of notice if you are dismissing him or her fairly for gross misconduct. In other circumstances, you will either have to let employees work out their notice or - if you want them to leave immediately, rather than hanging about disgruntled - pay them in lieu of it.
But if you do want them to leave immediately with pay in lieu of notice, then you must have an express provision in their contract of employment that entitles you to pay them off in that way. Without such a provision, if you dismiss employees with pay in lieu then, technically, you are breaching their contract, and this may prejudice you in enforcing any contractual obligations later (such as restrictive covenants that prevent them poaching customers or setting up in competition).
Moreover, there is a risk that the courts will take a poor view of such a move, particularly if it appears to have been made with a view to cutting the period of employment short to the employee's particular detriment. The Scottish Court of Session (equivalent to the Court of Appeal) has previously refused to accept that there was an implied term in an employee's contract allowing the employers to dismiss him with pay in lieu, and thereby get out of paying him a bonus to which he would otherwise have been entitled.
Where you are not dismissing on the grounds of gross misconduct and you neither pay money in lieu of notice, nor allow the employee to work his notice out, he or she is likely, following termination, to have grounds for a claim for wrongful dismissal (see 1). This could result in an award of damages (ie financial compensation). In establishing the level of damages for wrongful dismissal an Employment Tribunal takes into account (and if appropriate deducts) any money that they have earned from new employment during the notice period.
The situation may not be the same in relation to compensation for unfair dismissal (including constructive dismissal). The situation is not clear, but Employment Tribunals are currently ordering employers to pay compensation for notice periods even if their employee found a new job during that period. Take advice.
If the claim is one that can be brought to the Employment Tribunal, it must, in most cases, be brought within three months of the date of dismissal.
The Employment Tribunal has the discretion to extend time if the employee can show that it was not reasonably practicable to present the claim within the three-month period.
If the claim is one that can be brought in the civil courts (ie breach of contract - see 1), an employee has six years to claim. The court has discretion to extend time in some situations.
Time can be extended in discrimination cases, when to do so would be 'just and equitable'. The Employment Appeals Tribunal has also ruled that Tribunals have discretion to allow discrimination cases to proceed, even though the grievances to which they relate were not submitted until after the end of the initial three-month period - provided they were submitted within one month of the end of that time.
It is best just to give a factual reference, with the dates of employment and the position of the employee. If you give more information, however, make sure that the reference is fair and accurate, and not misleading.
You are not required by law to give any reference at all. However, a refusal to give a reference (for example, where the employee has raised issues of sex discrimination during employment) could in itself give rise to a claim for victimisation. The Court of Appeal has recently ruled that an employer who refused a reference to a 'whistleblower' was guilty of just such illegal victimisation.
You owe a duty of care to the ex-employee, to ensure that the reference is not prepared carelessly or negligently. However, you also owe a duty of care to the prospective employer. You could have a liability to either party, if they suffered loss because the reference was misleading or inaccurate.
If it is important to you that your ex-employee does not see the reference, take legal advice. This can be difficult to achieve, as a new employer is usually required to disclose a reference to their new employee, even if you are not.