Dismissal – Part One

This factsheet gives introductory guidance on types of dismissal; eligibility to claim unfair dismissal; fair reasons for dismissal and dismissal and disciplinary procedures.

RML members should seek advice as early as possible when considering dismissing an employee.

The Definition of Dismissal

The precise meaning of "dismissal" for purposes of the Employment Rights Act (ERA) 1996 is very important. If a person has not technically been "dismissed", he will not be able to claim compensation for "unfair dismissal" and nor will he be able to claim "dismissal by reason of redundancy".

•  the employer terminates the contract
• a limited term contract ends and isn't renewed
• the employee resigns in circumstances where they're entitled to do so because of the employer's actions

Eligibility to claim unfair dismissal

Employees can usually claim unfair dismissal only if they have worked for at least one year with the Company.

However, there are a number of reasons for dismissals that are automatically unfair. Most of these do not require the employee to have a minimum of one year's service, ie they will be able to claim unfair dismissal from day one of their employment.

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Dismissing fairly

To dismiss an employee fairly, there must first be a fair reason for doing so. The potentially fair reasons include:

• conduct
• retirement
• capability
• redundancy
• a statutory requirement which could prevent the employment continuing - eg a driver losing their licence

If an Employer wants to dismiss someone for another reason, it could fall into the category of 'some other substantial reason'.In order for any dismissal to be fair, the Employer must also act reasonably in how they decide to dismiss and follow a fair procedure.

Acting reasonably

Reasonableness is undefined. However, tribunals will probably consider whether the employer:

• genuinely believed that the reason for dismissal was a potentially fair one
• had reasonable grounds for that belief
• carried out proper and reasonable investigations where appropriate
• followed procedures
• told the employee why they were being considered for dismissal and listened to their views
• allowed the employee to be accompanied at disciplinary/dismissal hearings
• gave the employee the chance to appeal against the decision to dismiss
• acted within the 'band of reasonable responses' available in the circumstances

Reasonableness may also depend on whether the employee could be expected to understand the consequences of their behaviour.

A Fair Procedure - Dismissal and disciplinary procedures

All employers should set out their dismissal and disciplinary rules and procedures in writing.

An employment tribunal can order an Employer to pay an employee compensation if they fail to do this and the employee succeeds in an employment tribunal claim.

Any procedure should accord with the good-practice advice set out in the revised Acas code of practice on discipline and grievance. If the Employer unreasonably fails to follow the code and the issue ends up at an employment tribunal, the tribunal could increase any compensation it awards the employee by up to 25 per cent.

The new ACAS Code of Practice for Discipline and Grievance can be found at www.acas.org.uk/dgcode2009

Penalties for unfair dismissals

If an employment tribunal finds that an employee has been unfairly dismissed, it may order the employer to reinstate or re-engage them.

More commonly, a tribunal will award compensation, including a basic award which depends on the employee's age, gross weekly pay and length of service, and a compensatory award.

Compensatory award is the name given to the award which an employment tribunal must make to a successful claimant in an unfair dismissal case to compensate him for financial loss suffered as a result of his dismissal "in so far as that loss is attributable to action taken by the employer" (ERA 1996 s.123)

 The tribunal can also make an additional award if the Employer fails to follow the tribunal's order to reinstate or re-engage the employee

Click here to view the current Unfair Dismissal Rates

Notice periods

Summary dismissal - dismissal without notice or pay - can sometimes be justified if an employee's behaviour amounts to gross misconduct.

However, in all other cases an Employer will need to give the employee the period of notice set out in their employment contract or the statutory notice period, whichever is longer.

If an Employer decides that they don't wish the Employee to work out their notice period, there are two possible options:

• Allow them to leave immediately, but with a payment up to the date they would have left - known as a payment in lieu of notice (PILON).
• Continue paying them up to the date when the notice period ends but ask them to stay home and not to do any work - known as garden leave.

An Employer can only make a PILON if the employee's contract allows for it or - if not - they agree to receive one on their dismissal.

If as an Employer you make a PILON but it is not provided for in the contract or the employee doesn't agree to it, this could amount to a breach of contract.

However, the payment itself acts as damages for that breach – as long as it is equal in value to both the employee's normal pay and any contractual benefits they would've been entitled to had the Employee worked their notice.

Record keeping

• Keep records on:
• the nature of any breach of disciplinary rules
• the action taken
• the reasons for the action
• whether an appeal was lodged
• the outcome of the appeal and any subsequent developments

You must keep records confidential and carefully safeguarded. Do not keep them for any longer than necessary. Let employees know how long a disciplinary record will be kept on their file.

This is only a brief introduction on the area of Unfair Dismissal, any RML members considering any potential dismissal should contact RML immediately. RML will guide you through this process creating all necessary letters, written warnings and will also assist in any subsequent appeal the employee may make.