How should I dismiss an employee?

There are many difficult decisions involved in running a business. Sometimes the difficult decision involves ending the employment relationship with a member of staff and this can carry risk. There are several factors to consider when dismissing an employee to minimise the potential risk to your business. If the dismissal is not carried out lawfully, the employee could be entitled to bring a claim in the Employment Tribunal for unfair dismissal, wrongful dismissal, and possibly even discrimination, so it’s important to get things right.

What are fair reasons for dismissal?

Firstly, you should ensure that you have a fair reason for the dismissal. The five potentially fair reasons are:

1.             Conduct – where the employee has behaved in an unreasonable or inappropriate manner, either by a single act of gross misconduct or a series of less serious acts.

2.             Capability or qualifications – where the employee cannot do their job due to poor performance, ill health or does not have the necessary qualifications.

3.             Redundancy – where the employee’s role is no longer required because there is a business closure, workplace closure, or reduced requirement for employees.

4.             Illegality – where the employee cannot legally carry out their job, e.g., due to their immigration status or a driving ban.

5.             Some other substantial reason (SOSR) – where the reason is substantial and justifiable but does not fall into the above categories.

How do I follow a fair procedure before dismissal?

You must follow a full and fair procedure before deciding whether to dismiss an employee. This will usually involve informing the employee of the reasons for their potential dismissal, giving them an opportunity to respond formally at a meeting or hearing and allowing them to appeal against any formal decision made. In cases of misconduct or poor performance in particular, you should comply with the Acas Code of Practice on Disciplinary and Grievance Procedures, which can be found here.

What obligations do I have as an employer?

Once you have made the decision to dismiss an employee, you should ensure that you comply with the terms of their employment contract when doing so. You must give adequate notice, unless the employee is being dismissed in response to their gross misconduct or repudiatory breach of contract, in which case you will be entitled to dismiss them without notice or payment in lieu of notice (known as a summary dismissal). It is worth noting that if the employee is dismissed in breach of contract, you will lose the benefit of any contractual rights such as post-termination restrictions.

How do I manage risks of a discrimination claim?

Lastly, you should ensure that the dismissal is not in any way discriminatory. The reason for dismissal must not be based (directly or indirectly) on a protected characteristic, for example disability, gender or race and you must not discriminate against the employee during the dismissal process. Following a fair process and documenting the decision can help.

Does an employer need to provide written reasons for termination?

Provided the employee has two years’ service, they will be entitled to request a written statement setting out the reasons for their dismissal, which must be provided within 14 days. If the employee is pregnant or on statutory maternity or adoption leave, they will be entitled to a written statement without having to request one, irrespective of their length of service. Even if an employee has less than two years’ service it is sensible to confirm matters in writing including from the perspective of managing claims of discrimination.

When should I take legal advice on my options?

It is important to ensure that any dismissals are fair and lawful to reduce the risk of employment tribunal proceedings being initiated by the employee. Ideally, you should consider taking legal advice before commencing any disciplinary, capability or redundancy procedures. Employers sometimes find that taking an alternative route and negotiating an agreed exit with the employee by way of a settlement agreement can be a useful and less disruptive alternative to the dismissal process, which we discuss in further detail here. Should you wish to know more about whether a negotiated exit might be the right option for your business or if you would like to discuss any of the other points in this blog post, we’d be delighted to hear from you, so please do get in touch!

Please note this blog does not cover the termination of fixed-term contracts or automatically unfair dismissals which have specific rules that apply.