Fair Dismissal at Work

Employees with more than two years’ service have unfair dismissal rights and...
  • Author: Siva
  • Last updated: November 9, 2022
  • 5 Minutes
a guide to fair dismissal of employees in a small and medium business in UK explained by Papershift

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Employees with more than two years’ service have unfair dismissal rights and if they deem their dismissal unfair, can bring a claim in an Employment Tribunal against your business. So how do you ensure that a dismissal is fair?

Read on to find out. 

What is a fair dismissal?

A fair dismissal is where an employee or member of staff is dismissed from their employment for a justifiable reason. 

Reasons for fair dismissal can be varied (see later) and in some cases a dismissal can be automatically deemed unfair.

When is the reason for dismissal ‘fair’?

The five potentially fair dismissal reasons under the Employment Rights Act 1996 are:

  1. Misconduct. This can be one serious act deemed to be gross misconduct, or several less serious acts.
  2. Capability or qualifications. Typically, this means poor performance or ill-health.
  3. Redundancy. This is where there is closure of a business or a particular workplace or less of a requirement for an employee’s role.
  4. Contravention of a statutory restriction. This is where an employee and/or employer would be breaching statute to allow the employee to continue to perform their job. For example, if an employee is a driver and has lost their driving licence or if an employee does not have the right to work in the UK.
  5. ‘Some other substantial reason’. This rule is designed to catch potentially fair dismissals that don’t fall into the other categories, such as when an employee refuses to agree to changes to terms and conditions.

How do tribunals identify the reason for dismissal?

In a tribunal, it will be up to the employer to show the reason for a dismissal. If a fair reason to dismiss is established by an employer, the actual decision to dismiss is then considered in terms of reasonableness. Was it reasonable for the employee to be dismissed in that particular situation in the manner in which they were?

Identifying the reason for dismissal isn’t always straightforward for the following reasons:

  1. There might be more than one reason. If so, the employer needs to identify the main one.
  2. A tribunal might decide that the reason given isn’t the right one and that the dismissal was for an ulterior motive. 
  3. In respect of redundancy, even if the redundancy is genuine the selection of the staff member might be for a ‘protected’ reason that’s automatically unfair.
  4. The ‘Some other substantial reason’ is deliberately vague and employers may try to use it to mask the real reason for dismissal.

At the end of the day, it’s important that the employer only dismisses an employee when they feel the reason is fair or they may have difficulty at a tribunal.

When is a dismissal automatically unfair?

Sometimes the reason for a dismissal is automatically unfair. The main examples of this are:

  1. The employee was dismissed because they were a whistle-blower about the company.
  2. The employee was dismissed because of family reasons. These can be for things like pregnancy, childbirth, and exercising the right to family leave such as maternity, paternity or parental leave.
  3. Certain health and safety reasons.
  4. The employee has exercised their right to not work more than 48 hours per week as per The Working Time Directive.
  5. The employee was asserting their right to minimum pay under the National Minimum Wage or National Living Wage Acts.
  6. The employee was exercising their right to attend trade union activities or taking part in protected industrial action.

Unlike for other unfair dismissal reasons, there’s no two-year qualifying period for the above automatic unfair dismissals and these are ‘day one’ rights. Plus, there’s no upper limit on the compensatory award for dismissal for whistleblowing or for carrying out health and safety activities.

What is the test for reasonableness?

Once the potentially fair reason is identified, a tribunal has to decide if the employer acted reasonably. There are two parts to this:

  • Did the employer act reasonably in treating the reason as sufficient to dismiss?
  • Was the employer‘s decision to dismiss within the ‘range of reasonable responses’ for the company? 

Again, if the tribunal decides that the employer has failed to do either of these things, the dismissal will be considered unfair.

So, how do I dismiss fairly for misconduct?

Dismissals on the ground of misconduct can cover matters inside work, such as a failure to follow lawful instructions or poor conduct outside work that damages the employment relationship.

To dismiss fairly for misconduct, you will need to:

  1. Prove that at the time of dismissal you genuinely believed the employee to be guilty of misconduct, even if this is not eventually found to be correct.
  2. At the time of dismissal, you had reasonable grounds for believing that the employee was guilty of that misconduct.
  3. You formed that belief on those grounds, after you had carried out as much investigation as was reasonable in the circumstances.

What’s the difference between misconduct and gross misconduct?

There are two main differences between gross misconduct and misconduct:

  1. Gross misconduct will usually allow an employer to dismiss without notice.
  2. An ‘ordinary’ misconduct dismissal will generally only be fair if the employee has been given previous warnings which have not expired and have not been heeded by the employee.

Conduct outside work can be misconduct, as long as it affects the company’s reputation.

Can an employer dismiss without giving notice?

Employees are entitled to notice unless they have committed an act of gross misconduct. A dismissal without the proper notice will be considered a wrongful dismissal.

How can I minimise the risk of an unfair dismissal claim?

Here are a few things you can do to minimise the risk of an unfair dismissal claim if you run a business:

  1. Set out the rules. Have a clear disciplinary policy in employees’ contracts and/or the staff handbook. Make it clear what constitutes gross misconduct and make sure employees know about the policies and where to find them.
  2. Apply the rules to all your workers fairly. 
  3. Have clear guidelines on what constitutes poor performance. Give the employee a proper chance to improve but explain the consequences of a failure to do so.
  4. Make sure you conduct thorough investigations. Do this thoroughly before any disciplinary action is taken, even if the employee admits guilt. 

In conclusion

Fair dismissals, while often distasteful, are a necessary part of being an employer. But getting them right can be incredibly tricky.

Thank you for reading this guide. For more useful workplace information, check out the rest of our website.

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Written by Siva

I write & describe the value & benefits delivered by Paperhift's rota planning, staff time tracking, and employee payroll management software. Especially useful for Shift Planners, Rota Managers, Team Admins, and HR Teams :-)