How often have unsatisfactory employees been dismissed, and then won compensation from their ex-employer? Unfortunately, too often, says Bob Patchett.

Dismissing someone who deserves the sack is not difficult; the problem is the word “deserves” because the definition of deserve is not a subjective one made by the employer, but one set out in both common and statute law. We therefore must understand the different types of dismissal and how to handle them safely.

Different types of dismissal?

Three types of dismissal can lead to an employer paying handsome compensation unless carefully handled. If a dismissal is not carried out in accordance with statute law, it may be judged to be unfair. If it is not carried out in accordance with the employee’s contract, a common law issue, it may be judged to be wrongful. And if the employee is dismissed instantly then, regardless of the offence, the employer is likely to be in breach of the requirements for what is properly called summary dismissal. Let us look at these in turn.

Unfair dismissal

The law requires that, if you wish to dismiss employees with at least two years of service, you must have a fair reason and you must carry out the dismissals in a fair way. And here lies the problem and the solution. The problem is that the concept of fairness is not a reflection of your morality or personal feelings, and the solution is that the concept is clearly laid out for you in a series of steps in law and established good practice.

A dismissal is fair only if it is for one of five reasons. First, the employee’s conduct is below a required standard, for example persistent lateness, failing to follow instructions. However, you need to have a published regime whereby the employee is given warnings before taking the final step. And throughout that process your aim must be, by discussion, advice or sanctions to bring the employee to a satisfactory standard. Second, you may dismiss on grounds of the employee’s incapability, again after warnings, appropriate help and attempts to redeploy into more suitable work. Third, redundancy is a fair reason, provided it is genuine, you have selected objectively, you have consulted properly and given time for employees or their representatives to suggest alternative measures, have allowed eligible employees to have time off to seek alternative work, and have given appropriate notice. These are the three areas where employers who fail to follow the processes come unstuck.

However, it is fair to dismiss an employee whom it is unlawful to employ; and also if there is a “some other substantive reason” clause, though you would be advised to take professional advice before using it.

So, to avoid claims of unfair dismissal:

  • make sure that you are dismissing for one of the above reasons

  • check that the reason is genuine

  • be sure to have published procedures for dealing with misconduct, incapability and redundancy, and follow them carefully

  • take any opportunity of taking steps other than dismissal

  • if you are unsure about what you are doing, seek professional advice before acting.

Wrongful dismissal

This essentially is a breach of the employment contract, a common law issue that the employee can pursue regardless of length of service. Difficulties arise when employers believe that they have wide scope to dismiss because “there is no contract” or “there is nothing in writing”. In fact, there are two problems. First, if you recruit someone to do work for you and pay them wages, a contract exists in law, albeit nothing has been put down in writing. Second, every employee with one month of service should be given a written statement of certain terms and conditions of employment and, if you have failed to do this, then you could be hauled up in court, fined, and be told what the contract has to say.

Unless the employee has committed gross misconduct, described below, you must give notice to terminate the employment. This is the greater of what the contract says or what the law demands. You may feel disinclined to keep the employee on site during this period, so you could choose either to put them on “garden leave” — the employee does not come into work but continues to be paid — or make a payment in lieu of notice. However, you must have the employee’s agreement to do the latter. So, whatever the arrangement, you must pay normal wages or equivalent for the whole of the notice period plus any outstanding dues such as holiday pay.

This means:

  • ensuring that every employee has a written statement of the terms and conditions of employment set out in law

  • giving the required period of notice if dismissal is for reasons other than gross misconduct

  • you may tell dismissed employees not to come into work during notice periods, but must continue to pay them

  • you may agree a quick termination with the employee in return for a payment in lieu of notice

  • the employee should receive any outstanding holiday or bonus pay

  • you may need to make arrangements for the return of company property.

Summary dismissal

You must expunge from your vocabulary the phrase “instant dismissal”. If you are considering dismissing someone for doing something truly dreadful, then you are looking at summary dismissal for gross misconduct — a process that must be followed but which results in dismissal without previous warnings and without notice. Gross misconduct is something that makes continuation of the employment relationship untenable, and examples, such as bullying, discriminatory actions or language, breach of safety regulations and others that are peculiar to your workplace, should be included in your discipline procedure You cannot of course include all possible examples, therefore you should add a rider that it is not an exhaustive list.

In cases of gross misconduct, you must carry out a normal disciplinary hearing after full investigation, consider all evidence and ideally get a second opinion before deciding to summarily dismiss. If you conclude that gross misconduct has occurred, then you should dismiss with immediate effect. You give no notice, and pay only to that point but include dues such as any outstanding holiday entitlement calculated to that date. If, because of the nature of the offence, you feel it unwise for the employee to remain on site, you may indeed remove them instantly, but the employment will not end at that point. You may call the employee back for a hearing or conduct it by post.

So:

  • instant dismissal without a hearing would be unlawful

  • give examples of gross misconduct in your disciplinary procedure

  • indicate that the list of examples is not exhaustive

  • if appropriate, get the employee off site immediately, but this does not end the employment

  • give the employee a normal disciplinary interview, if necessary by post

  • get a second, objective opinion before dismissing

  • no period of notice should be given

  • pay wages and all dues up to day of dismissal.

This seems too complicated, so what can we do?

A procedural slip-up with a clearly guilty employee could cost you thousands of pounds. Look at the cost of Croner-i HR, which gives full guidance and a helpline for bespoke employment issues: ring 0844 561 8149. Then you work it out!

Last reviewed 13 February 2019