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Employment Law

Unfair Dismissal

What is ‘Unfair Dismissal’?

Dismissal of an employee can be fair or unfair. Section 94 of the Employment Rights Act 1996 states: “An employee has the right not to be unfairly dismissed by his employer”. Unfair dismissal is unlawful and could result in substantial awards being made against an employer. It is important that employers actively seek advice about what makes a dismissal unfair, as there are simple things that can be done to dismiss an employee properly and avoid claims for unfair dismissal.

‘Fair’ and ‘Unfair Dismissal’

In general, to claim unfair dismissal from 6th April 2012 onwards, the person must have been employed for at least two years; employment beginning prior to the said date requires a qualifying period of only a year. However, the qualifying period of employment does not always preclude claims for unfair dismissal. There are certain circumstances where dismissal is automatically unfair, should it be established that either of these was the true reason for dismissal.

These circumstances include:

• Dismissing an employee because they are pregnant, on maternity or a related reason;

• Dismissing an employee because they have tried to enforce their legal rights;

• Dismissing an employee for reporting a Health & Safety issue in the workplace;

• Dismissing an employee for being a trade union member or taking part in official industrial action as part of trade union activities.

Where an employee has worked for the qualifying period as explained above, dismissal is automatically unfair if the reason for dismissal was:

•That you have taken over the business from someone else and dismissed employees already working there as part of the takeover; or

• An employee is dismissed for not declaring a spent conviction (if the job does not require that they do so).

The reason for dismissal is an important factor in whether or not an employee was fairly dismissed. Once the fact of dismissal has been established by the employee the burden of proof shifts to the employer to prove the reason for dismissal and that it falls into one of the fair categories.

Section 98 (2) of the aforementioned Act states the reasons for dismissal as:

· Relating to capability or qualifications of the employee;

· The conduct of the employee;

· Redundancy;

· That for the employee to continue working would contravene law.

There is still room for unfair dismissal even if the reason for dismissal is one prescribed by the Act. An example of this is where the employer dismisses the employee due to poor conduct where the employee is careless. The dismissal can potentially be unfair if the employer has previously accepted poor standards from the employee without giving any warning. Therefore it is important for employers to follow procedure and issue warnings where appropriate as this minimises the chance of a claim for unfair dismissal where the reason for dismissal is a fair one.

There is also a catch all provision of “some other substantial reason” which can justify dismissal.

Reasonableness/Complying with Employee Contract

The employer must be able to show that they acted reasonably in dismissing the employee. For example, where the employee is performing poorly the employer should intimate their concerns and give the employee the chance to improve before dismissing.

Employers should also ensure they comply with the employee’s contract of employment. If there is a contractual notice of dismissal then this should be followed. Failing there being any contractual notice, the law says there should be a minimum period of notice depending on how long the employee has worked for you. Failure to comply with a period of notice may open the employer up to wrongful dismissal and breach of contract claims as well as unfair dismissal.

Employers should not discriminate against an employee on a legally protected characteristic, either that being the reason for dismissal or during the dismissal process. If this is proven at the Tribunal, the compensatory award may be substantially higher.

Fair Procedure

Even where the reason for dismissal was fair, the process by which an employee was dismissed may still make the dismissal unfair. Employees should be given sufficient information about why they are being dismissed.

Some claims for unfair dismissal can easily be avoided by ensuring the reason given to the employee for dismissal is the actual reason. For example, employers should avoid using redundancy for dismissal where the real reason is the employee’s capability for the job. This is likely to impact negatively against the employer in any subsequent Tribunal hearing and may affect any award made to the ex-employee. In dismissing an employee because of their conduct or performance good practice would be to comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures. This details procedure to be followed and failure to comply with it may result in an increased award of compensation.

What awards can be made by the Tribunal?

If an employee is found to be unfairly dismissed the Tribunal will award compensation made up of a basic and compensatory award. The basic award depends on the period of service and the age of the ex-employee. The compensatory award is made in respect of loss of earnings and can include any benefits that would have been received as a result of the employment, such as bonuses, and can even take account of factors like loss of reputation. The Tribunal can also in rare circumstances order re-employment.

Employers can opt for the ACAS Arbitration Scheme which is designed for straightforward unfair dismissal cases. It is faster and has associated benefits should the scheme decide in favour of the employer.

Like the old saying goes, time is money. Irrespective of whether a claim against the employer succeeds, there can be significant costs in defending the claim which are usually not recoverable, not to mention the time spent. Thus it is in the interests of the employer to do all they can to avoid any claims for unfair dismissal and seek advice where appropriate.

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