What employers need to know when firing staff
Emotions often run high when an employee is dismissed. Dismissed employees will often be upset and angry and, if they feel poorly or unfairly treated, may take legal advice on whether they have a claim against you.
Employers with well-trained managers and the right procedures and policies in place generally have little to fear when dismissing staff. Employers who don’t have these things, or ignore them when dismissing an employee, can leave themselves exposed to costly and time-consuming employment claims.
Length of service
Employees who have worked for their employer for more than two years are protected by the laws on unfair dismissal. This means that employers can only dismiss employees with more than two years’ service for one of five “fair” reasons, failing which they leave themselves exposed to a claim for unfair dismissal. The employer must also follow a fair process when dismissing the employee.
If an employee successfully proves they were unfairly dismissed claim, an employment tribunal has the power to award compensation to the employee (for 2017):
- of up to £14,670 for a basic award; and
- in addition, a compensatory award of up to £80,541.
Regardless of length of service, you can’t simply dismiss staff for any old reason as there are some automatically unfair and unlawful reasons for dismissing staff (which we’ll come onto below).
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Grounds for dismissal
Where an employer is dismissing an employee who has over two years’ service, they must be careful to follow a fair process and ensure the grounds for the dismissal fall within one of the five “fair” reasons. These are:
- misconduct – this ranges from minor to gross misconduct. Whilst the former may only require a verbal or written warning the first time it happens (and will generally require the employee to be given two formal written warnings before dismissal can be considered), gross misconduct (e.g. fraud, theft or violence) can entitle to the employer to dismiss the employee on the spot without the right to notice.
- capability – where the employee isn’t capable of the job (e.g. because they lack the necessary skills or qualifications or sickness means they aren’t capable of performing their job). However, the employer will need to demonstrate they acted fairly and reasonably (e.g. they gave the employee the necessary training in order to fulfil their duties) prior to the dismissal.
- redundancy – where there is no longer a role for the employee at the business – e.g. because new technology is being introduced or all/part of the business is being closed. Employers must be careful follow the rules on selecting employees for redundancy.
- Illegality – this is where the employee cannot continue to do their job as it would be illegal - e.g. if they are a taxi driver and they lose their driving licence, or if they are no longer entitled to work in the UK.
- “some other substantial reason” – a catch-all reason, this will need to be considered carefully in light of the circumstances. For example, the non-renewal of a contract for an employee recruited for maternity leave cover (where the circumstances were made clear to the employee) could be considered some other substantial reason. If considering this form of dismissal, advice should be taken from an employment specialist to ensure the grounds are a “substantial reason”.
Automatically unfair or unlawful grounds for dismissal
Irrespective of length of service, it is automatically unfair or unlawful to dismiss an employee for any of the following reasons:
- pregnancy or maternity.
- family rights – e.g. parental leave, adoption or paternity rights.
- employee acts as an employee/trade union representative.
- taking part in industrial action.
- employee acts as pension scheme trustee.
- membership or non-membership of a trade union.
- status as part-time or fixed-term employee.
- pay and working hours.
- discrimination, including protection against discrimination, on the grounds of: age, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.
- disability (unless there are no reasonable adjustments which can be made to allow them to do their job).
- age (unless you can objectively justify it).
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How to protect yourself against claims
There’s no one-size-fits all method for dismissing employees safely. The grounds and process for each dismissal should considered separately and in light of your own rules and procedures and the laws on dismissal.
Having said that, there’s a few things you can do which should help limit your exposure to costly and time-consuming employment claims:
- contracts, policies and procedures – make sure your employees have properly drafted employment contracts incorporating your staff handbook (which contains your dismissal policies and procedures) which they are made aware of. For example, your staff handbook might state that physical violence, theft or fraud are grounds for gross misconduct, the procedure for which follows the Acas Code of Practice, giving you a strong position to dismiss an employee on the basis of gross misconduct if they do one of these things.
- follow your policies and procedures - it’s no use having a nice set of policies and procedures if you ignore them when dismissing an employee - make sure you follow them.
- train your staff – ensure managerial staff who deal with dismissing employees are properly trained in the procedures and processes required to dismiss employees.
- Acas Code of Practice – be careful when not following the Acas Code of Practice - although not legally required, an employment tribunal can increase an award by up to 25% if you don’t follow it.
- act “reasonably” – what will be considered reasonable will vary depending on the circumstances. However, the following are a good general guide:
- satisfy yourself that you genuinely believe the reason for the dismissal is fair
- carry out proper investigations
- follow relevant procedures
- tell the employee they’re being considered for dismissal and listen to their views
- allow employees to be accompanied to hearings
- give them the right to appeal
- give them the correct notice period
Should you take legal advice when dismissing an employee?
It’s often worth taking advice when considering dismissing an employee, particularly where you don’t have proper written employment contracts, procedures and/or policies in place.
Taking the time to have a quick consultation with a specialist employment lawyer could help you avoid a costly claim, saving you a great deal in the long run.
Declan is an employment lawyer who takes a particular interest in helping early stage startup companies get to grips with the legal aspects of their fledgling businesses.
James is a partner with 20 years' experience in employment law. His clients are typically SMEs and entrepreneurs who he helps to manage risk, grow, and expand their business interests.
Tom advises and represents clients in all areas of UK employment law. Tom prides himself on providing clear, realistic, expert advice combined with absolute professionalism. Tom is committed to achieving the best possible outcome with outstanding service and unrivalled value for money.