Employers Questions - Dismissing an employee fairly

Q1: I have an employee who works in our accounts department. She has been with us for about ten months. She doesn’t work very hard, chats all the time and has no interest in her job. Can I just dismiss her?
Q2: Our Managing Director wants to dismiss the Sales Manager because he doesn’t agree with the changes the Managing Director needs to make for business efficiency. The Sales Manager has been employed for about 15 years and the Managing Director is new. Would this clash between them be a sufficient reason to dismiss the Sales Manager?
Q3: My Business Development Manager has been claiming more expenses than he is entitled to. Surely this is serious enough to just dismiss him?
Q4: We would like to dismiss an employee who works in our warehouse. Generally he has a bad attitude - both towards his colleagues and his work. Rather than go through a long and time-consuming disciplinary procedure, our Finance Director has suggested we just make him redundant - can we do that?
Q5: What are the tribunal penalties we might face if we dismiss unfairly?
Q6: I have heard that there are possible moves to give more workers statutory employment rights, such as to claim unfair dismissal. Is this right?

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If you require legal advice on this or any other employment law issue, please contact Tony Hyams-Parish or your usual contact in the employment team at Rawlison Butler LLP.

This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this document.

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Answers to questions below, please click on the questions above to be directed to the correct answer.

A1:There are a number of issues you should consider first. As the law stands now, generally only employees with one year's service or more have the right to claim unfair dismissal. There are limited exceptions to this general rule, for example where the reason for the employee's dismissal is union or maternity-related, in addition, where the dismissal may be linked to discrimination no qualifying period may be necessary at all. The Statutory Dismissal and Disciplinary Procedures do not alter the requirement for one year’s continuous service.

You may be able to lawfully dismiss this employee by simply giving her notice. However, before you take this step, you should check your Company's disciplinary procedure. You may find that your employees are contractually entitled to have this procedure followed. If so, even with less than one year's service, your employee could claim you have acted in breach of contract by dismissing her without carrying out your own procedures.

You should seek advice from a lawyer in our employment team if you are not sure whether this employee is eligible to bring an unfair dismissal claim.

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A2: Not necessarily. Where an employee is eligible to claim unfair dismissal you must have a 'potentially' fair reason for dismissal and also act reasonably, in all the circumstances, in dismissing for that reason. There are six potentially fair reasons to dismiss. These are redundancy, capability, conduct, some other substantial reason, retirement and where there is a statutory prohibition on continuing to employ someone. Some other substantial reason is really a 'catch-all' category and can include a range of issues, from dismissal as a result of a business re-organisation, to third party pressure, perhaps from a major client.

The clash between the two individuals could be grounds for a fair dismissal, perhaps for conduct or even some other substantial reason if the Sales Manager is being unreasonably intransigent. However, that is not the end of the matter. The company must believe that the reason for the dismissal is serious enough to be capable of justifying dismissal. So, if the Managing Director is simply acting unreasonably and looking for an excuse to dismiss this long serving employee, perhaps because his face doesn’t fit, he would be likely to lose any unfair dismissal claim brought by him at an employment tribunal.

If however, the Sales Manager's non co-operation is putting the company’s business at risk and it is clear that the breakdown between them is irremediable, then this may well be a potentially fair reason for this employee's dismissal.

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A3: The fact that this is likely to be treated as an act of gross misconduct does not mean that he is any less entitled to have your disciplinary procedures applied in this situation. Dismissal should not be an automatic response simply by virtue of the fact that you are dealing with gross misconduct.

Once you have completed any necessary investigations so that you are sure of your facts, you should follow your disciplinary procedure before making any decision to dismiss, allowing the employee to explain his behaviour and deal with the specific allegations. As a minimum, you must comply with the Statutory Dismissal Procedure that was introduced on 1st October 2004. Failure to do so will lead to a finding of automatic unfair dismissal regardless of the merits of the case.

If the case were to reach Employment Tribunal, the Tribunal would consider all of the facts including whether your procedure expressly stated that such conduct would be treated as gross misconduct or how other employees had been treated in this situation. An employer’s reaction must be consistent in all cases.

The law requires that any decision to dismiss must be within a band of reasonable responses employers would be expected to make in your situation. In coming to any decision as to whether a dismissal falls within the band of reasonable responses mentioned above, an employment tribunal will take all the relevant circumstances into account including the procedure followed and the size and administrative resources of the company.

It is always wise to seek legal advice from us on these procedural issues and before deciding to dismiss. This may save you the expense of a claim being made against you.

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A4: Unless the employee is genuinely redundant, you should not really take this step (which of course is not necessarily the quick route out for the Company). The main problem is that you would be deliberately concealing the real reason for the dismissal and likely to lose any unfair dismissal claim the employee might bring, even if you otherwise had good reason to dismiss him or, as does happen in some cases, you thought you were doing the employee a favour.

Do speak to someone in our employment team about your options in these circumstances.

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A5: If you do not have a potentially fair reason in law to dismiss an employee then the dismissal will be substantively unfair. In this situation, the employee will receive a basic award calculated in the same way as statutory redundancy pay plus a compensatory award of currently up to £60,600 depending on the actual net loss of earnings.

Employer’s should also note that, if an employer has failed to comply with the Statutory Dismissal and Disciplinary Procedure, the dismissal will be automatically unfair and a tribunal must increase any award that it makes to the employee by 10 to 50%. This does not alter the statutory cap of £60,600 but could significantly increase tribunal awards below this level.

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A6: Yes - the law may change on this issue in the future, so that more workers are entitled to bring claims of unfair dismissal. The DTI is also reviewing the use of dispute resolution procedures, in light of a recent review which called for a radical overhaul of the approach to resolving disputes at work, including the repeal of the statutory dispute resolution procedures introduced in 2004.

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