How to safely terminate employment
September 15, 2016
Taking the decision to terminate an employee can be a stressful one. How do you make sure you have a legitimate case? What’s the correct way to dismiss them to avoid being landed with an employment tribunal hearing? In this week’s blog we aim to shed some light on the factors you need to consider and will also explain the correct procedure to dismiss an employee safely.
What is dismissal?
Firstly, let’s look at the term dismissal. Dismissal is when you end an employee’s contract. There are many different kinds of dismissal including:
• Fair: You have a valid reason for dismissing someone such as redundancy, they committed gross misconduct, they are incapable of, or something prevents them legally being able to, do their job, e.g. they have lost their driving licence.
• Unfair: An employee can claim unfair dismissal and take you to an employment tribunal if they think the reason was unfair, you acted unreasonably or the reason you gave for dismissal wasn’t the real one. There are many reasons that are automatically deemed unfair: these include any discrimination over age, gender or race, pregnancy, acting as a trade union representative, joining or not joining a trade union and many more. You can find out more about unfair dismissal here
• Constructive: When an employee resigns because you’ve breached their employment contract. This could be because you cut their wages without agreement, unfairly increase workload, make them work in dangerous conditions for example.
• Wrongful: Wrongful dismissal is when you break the terms of an employee’s contract during the dismissal process. For example, dismissing someone without giving them propert notice.
What’s the difference between fair and unfair dismissal?
The difference between a fair and unfair dismissal rests entirely on two points; the reason for dismissal and how you act during the dismissal process. You must act ‘fairly’ and ‘reasonably’ and the law has very specific ways of defining these terms. To dismiss fairly you need a ‘fair’ reason such as conduct, behaviour, capability redundancy, breach of statutory restriction or some other substantial reason, such as a restructure. Even if you terminate via a fair procedure, if the reason isn’t ‘fair’ then the dismissal will be deemed unfair.
If your reason is fair, you must then act ‘reasonably’ before you terminate someone. This means you must investigate properly, consider alternatives and be consistent with how you have treated other employees. If you are dismissing an employee because of misconduct, you must conduct a thorough investigation before holding a disciplinary hearing and ensure they have the right to appeal your decision.
How to stay safe
To terminate an employee should be considered as a last resort. You should consider all possible alternatives before taking the decision to terminate. These alternatives will differ based on the particular issue you have with the employee. For example, if you are considering dismissing because of ill health, you should consider how you could get the employee back to work. You may need to consult their doctor, arrange an occupational health assessment or make adjustment to their role/work space if they are suffering from a disability. If on the other hand performance is the issue, then the employee must be warned about their short comings and given the time and support to improve.
If you make sure you act fairly and reasonably at all stages of the process, and have a legitimate reason for termination you should be safe from the penalties you may be concerned about from an employment tribunal. The ACAS (Advisory, Conciliation and Arbitration Service) code of practice has set out clear advice to business owners on how to dismiss someone properly. You can download the full code of practice here.
The implications of getting it wrong
If you are taken to an employment or industrial tribunal for unfair or wrongful dismissal the penalties could be considerable. You may be ordered to reinstate the employee into their previous position or ‘re-engage’ them, (re-employ them in a different job). You may have to pay compensation which varies depending on the employees age, gross weekly pay and length of service. The compensation a tribunal can award is limited unless you are penalised for unfair dismissal in cases relating to health and safety or whistleblowing. In these cases, compensation can be particularly severe.
If you are considering terminating an employees contract be sure to obtain professional advice to ensure you are working to the correct procedures. The team at Tercus HR are here to help whether you are looking for advice or a professional intermediary to ensure you get the resolution you desire whilst staying on the right side of the law.