This business briefing sets out the steps a business should follow when it is considering dismissing an employee.
Why is it important to follow the law when dismissing an employee?
Dismissing an employee for a reason other than one allowed by law, without following the correct procedure or giving adequate notice, may lead to a claim for unfair or wrongful dismissal against the business. Compensation for a successful claim can potentially be substantial. Regardless of whether a claim succeeds, the costs of defending it, in terms of management time and legal costs, may be significant and are not usually recoverable.
Establish whether there are grounds for dismissal
There are several potentially fair reasons for dismissing an employee:
- Their conduct at work (for example, they have filed a fraudulent expenses claim or persistently arrive late at work).
- Their inability to carry out their job because they lack the necessary skills required (for example, a sales manager has consistently failed to meet reasonable sales targets despite receiving additional support and training).
- Their absence on long-term sick leave and inability to return to their job.
- Their job is redundant (for example, if the business is declining or the workplace is facing closure). Do not use redundancy as an easy alternative to dismissing an employee for poor performance. The “redundant” employee could make a claim for unfair dismissal.
- Their continued employment would be illegal (for example, the business has discovered that an employee’s immigration status does not permit them to work).
Dismissing an employee for any reason other than those listed above will be unfair.
Always follow the correct procedure
Even if a business has established a potentially fair reason for dismissing an employee, it must still follow the correct procedure. Failure to do so could lead to a claim for unfair dismissal.
Generally, an employee must have completed a qualifying period of service before they can bring a claim for unfair dismissal. The qualifying period is two years or one year if their employment started before 6 April 2012.
However, certain dismissals are deemed to be automatically unfair and an employee is protected as soon as they start work. These include dismissals connected with:
- parental leave;
- requests for flexible working; or
Check the employee’s contract
It is possible to dismiss an employee fairly but still be in breach of contract if the business has not given them the correct notice under their contract. A business does not want to take any action that could breach an employee’s contract because:
It may lose valuable protections in the contract such as post-employment restrictions (for example, stopping an employee going to work for a competitor).
The employee may have a claim for wrongful dismissal in breach of contract (for example, if the business fails to give them their contractual notice period or pay a contractual bonus).