Empower UK Employment

Firing an employee is never easy, and if done incorrectly, it could end up costing your business more than just a severance package. In the UK, dismissing someone from your workforce can lead to expensive tribunal claims if the process isn’t handled according to the law. Employees with at least two years of service have the right to bring unfair dismissal claims, but even those with less tenure can claim if they believe they’ve been treated unfairly or discriminated against.

As a business owner, there is a high likelihood that you will face this situation at some point. So, when can you legally let someone go?

In this blog, we will walk you through the various types of dismissal under UK employment law, ensuring that you can navigate these challenging situations with confidence and clarity.

What Is Dismissal?

Dismissal is when an employer ends an employee’s contract, often referred to as being fired or let go. This can happen for a variety of reasons, from performance issues to redundancy, but it’s not a decision to be taken lightly. There is a clear process that must be followed to ensure the dismissal is fair and legal. It’s important for employers to have a valid reason for the dismissal and to follow the correct procedure. This means following the Acas Code of Practice, which outlines the steps for disciplinary actions and grievance procedures.

When an employee claims unfair dismissal, their case will likely go to an employment tribunal. In these cases, the way the employer handled the dismissal will be closely examined. If the correct procedures were not followed, it could result in a costly outcome for the employer. Therefore, understanding dismissal processes and ensuring fairness in every decision is key to maintaining legal compliance and avoiding potential legal issues.

5 Types of Dismissal in UK Employment Law

Dismissal is never a straightforward process. Whether you’re an employer or an employee, it’s a situation that can have significant consequences for both sides. In the UK, there are specific laws that outline the fair reasons for dismissing someone, and employers must follow these guidelines to avoid legal complications. If done incorrectly, dismissing an employee can lead to costly legal disputes. That’s why understanding the different types of dismissal in UK employment law is crucial.

In the UK, the Employment Rights Act 1996 sets out the legal grounds under which an employee can be dismissed. There are five main reasons that an employer can rely on to dismiss an employee fairly:

Misconduct – When an employee engages in inappropriate or unacceptable behaviour. This can range from minor offences like poor attendance to more serious breaches like theft or violence in the workplace. Gross misconduct can justify immediate dismissal, but the process must still be fair and reasonable.
Capability – An employee may be dismissed if they’re unable to perform their job, either due to a lack of skills or qualifications, or due to illness or disability. Employers must show that they’ve made reasonable adjustments and given the employee the chance to improve before considering dismissal.
Redundancy – A role may be made redundant if it’s no longer needed due to business changes, such as downsizing, restructuring, or the closure of a department. However, redundancy must be handled carefully, and employers must ensure that the process is fair, transparent, and follows a specific procedure.
Legal Reasons – If an employee’s legal right to do the job is removed, dismissal may be necessary. For instance, if a lorry driver is banned from driving, they cannot continue in their role, which may lead to dismissal.
Some Other Substantial Reason (SOSR) – This is a catch-all term for dismissal situations that don’t fall under the other categories. Common examples include when an employee’s actions negatively impact the business, like causing reputational damage. These cases are often complex and need to be carefully handled.

Dismissing Employees: What You Need to Know Under UK Employment Law

In the UK, dismissals can happen for several reasons, but there is a legal framework in place that ensures fairness for both employers and employees. This framework requires employers to follow a set process, known as the Acas Code of Practice on Disciplinary and Grievance Procedures, which, although not a legal requirement, is highly recommended. Failure to follow this procedure could lead to claims for unfair dismissal.

Clear Procedure for Dismissing Employees

A dismissal procedure should be clearly outlined in your employee handbook, ensuring consistency and fairness across the board. There are five essential steps for handling disciplinary action that could lead to dismissal:

Conduct an Investigation: If there is suspicion of misconduct, the employer must investigate the situation thoroughly. During this period, the employee may be suspended but must continue receiving their pay until a formal dismissal decision is made.
Draft an Initial Letter: A letter should be sent to the employee outlining the issue and the potential consequences, including dismissal.
Conduct a Meeting: A formal meeting should be arranged to discuss the matter with the employee. They should be given sufficient time to prepare and may request to have a representative with them.
Inform the Employee of Your Decision: After the meeting, the employer must inform the employee of their decision in writing, including information on how to appeal if they disagree with the decision.
Provide an Opportunity to Appeal: An appeal must be heard by someone who did not initially make the dismissal decision, ensuring fairness. The employee must also be informed of their right to have someone accompany them to meetings.

Notice Periods and Statutory Requirements

It is important to understand the notice period required when dismissing an employee. The minimum notice period is known as statutory notice, which varies depending on the employee’s length of service. For example, if the employee has worked for the company for over a month but less than two years, the statutory notice period is one week. For employees who have been with the company longer than two years, the notice period increases by one week for each additional year of service, up to a maximum of 12 weeks.

However, there are exceptions to this rule, particularly in cases of gross misconduct. In such cases, the employer can dismiss the employee immediately without notice or pay in lieu of notice.

Written Warnings Before Dismissal

Employers generally issue warnings before resorting to dismissal, but the number of warnings depends on the seriousness of the misconduct. Typically, employees receive one verbal warning followed by two written warnings. It is common practice to remove verbal warnings from an employee’s record after six months and written warnings after 12 months.

While there are no strict legal requirements for how many warnings must be given, following a structured disciplinary process ensures fairness and reduces the risk of a claim for unfair dismissal.

Unfair Dismissal

Unfair dismissal occurs when an employer dismisses an employee without a valid reason or fails to follow the correct procedure. In the UK, employees who have been employed for at least two years have the right to claim unfair dismissal if they believe they have been dismissed unjustly.

However, there are instances where dismissal is considered automatically unfair, even if the employee hasn’t been with the company for two years. For example, an employee cannot be dismissed due to pregnancy, whistleblowing, or for taking maternity leave. In such cases, the length of service doesn’t matter, and the dismissal is automatically deemed unfair.

Employers must also ensure that the reason for dismissal is within the range of reasonable responses. This means the decision to dismiss must be one that a reasonable employer could have made in the circumstances. For instance, an employer who dismisses an employee for one minor error after a long history of good performance may find it difficult to justify the dismissal as reasonable.

On the other hand, In some cases, employees can make claims for “automatic unfair dismissal” regardless of their length of service. This includes dismissals for reasons such as pregnancy, whistleblowing, or taking part in jury service.

If found guilty of unfair dismissal, an employer may be required to pay compensation, which includes a basic award (up to £15,750) and a compensatory award (up to £86,444).

Wrongful Dismissal

Wrongful dismissal differs from unfair dismissal as it refers to a breach of the employment contract. This happens when an employer fails to provide the required notice or doesn’t follow the terms set out in the contract, such as wrongful termination without sufficient notice.

In cases of gross misconduct, employers may dismiss employees immediately without notice. However, this type of dismissal needs to be thoroughly investigated, and the severity of the misconduct must be proven to ensure it qualifies as a breach of the contract.

Constructive Dismissal

Constructive dismissal occurs when an employee feels forced to resign because their employer’s actions have made their position untenable. In these cases, the employee may claim that the employer’s behaviour has breached the contract, thus entitling them to leave and claim damages.

Examples of constructive dismissal include unilateral changes to employment terms, bullying, or failing to address serious grievances raised by the employee. Proving constructive dismissal can be challenging, as the burden of proof lies with the employee. However, if a pattern of unfair treatment exists, leading up to a final “straw” incident, the employee may have grounds to claim constructive dismissal.

Employers can defend against these claims by showing that they acted appropriately when the issue was raised and that they tried to resolve the situation before the employee resigned.

Redundancy Procedures

When it comes to redundancy, the process must be handled carefully to avoid claims of unfair dismissal. A redundancy occurs when the role an employee occupies is no longer needed, which could be due to business changes such as company closure, a decrease in work, or a restructuring.

Key steps in the redundancy process include:

Consultation: Employers must consult with the employee or their representatives, especially in cases of collective redundancy.
Selection Criteria: It’s crucial to use fair, non-discriminatory selection criteria when deciding who will be made redundant. This could include factors such as skills, performance, and experience.
Alternative Employment: Employers should explore whether any alternative roles are available within the company or its group of companies.
Redundancy Pay: Employees with at least two years of service are entitled to redundancy pay, which increases with age and length of service.

Failure to follow the correct redundancy procedure can result in claims for unfair dismissal, so it’s important for employers to take the necessary steps to ensure fairness and transparency.

Final Thoughts

Managing dismissals under UK employment law is a complex but necessary process for both employers and employees. By following the right procedures, including conducting investigations, issuing warnings, and providing opportunities for appeals, employers can make fair dismissal decisions and minimise the risk of costly legal challenges.

Each of these dismissal types requires a fair procedure, and any failure to follow the correct process can lead to claims for unfair dismissal. It’s essential that employers keep records of their decisions, act consistently, and give the employee a chance to respond to any accusations or issues before taking the final step.

If an employee has been with the company for at least two years, they have the right to challenge their dismissal at an employment tribunal. That’s why both employers and employees need to understand their rights and obligations under UK law when it comes to dismissal.

Types of Dismissal in UK Employment Law: Every Employee Should Know

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