Unfair and wrongful dismissal

It is important for employers to understand the law relating to the dismissal of an employee otherwise the organisation will risk claims for unfair or wrongful dismissal.

Defending claims for unfair dismissal can be expensive and time consuming which can be the case whether or not the matter goes all the way to a final hearing at an Employment Tribunal.

What are the implications of a claim for unfair dismissal?

Usually where an employee is successful, an employer will be ordered to pay compensation. This will consist of a basic award and a compensatory award.

The basic award is calculated in a similar way to the calculation of a statutory redundancy payment taking into account the employee’s age, gross weekly pay (capped) and length of service.

The compensatory award is such amount that the Employment Tribunal considers just and equitable based on the financial loss suffered by the employee as a result of the unfair dismissal. The maximum compensatory award is the lower of either one year’s pay or a statutory cap which changes annually in line with inflation in April each year.

Wrongful and unfair dismissal solicitors

Wrongful and unfair dismissal solicitors

We are experienced in providing clear and commercially sensible advice to employers which aligns with best practice and reduces the risk of disputes arising. We can help with:

• Advising and assisting with dismissal procedures including highlighting any risks to the business
• Advising and negotiating termination packages and settlement agreements
• Reviewing policies and procedures to ensure these are up to date and legally compliant
• Drafting clear and comprehensive policies tailored to your organisation’s requirements
• Training on how to carry out fair dismissal and redundancy procedures
• Defending Employment Tribunal claims for unfair and wrongful dismissal

Wrongful Dismissal

A wrongful dismissal is where the dismissal is in breach of the employee’s contract of employment. There is no minimum period of service required for employees to bring this type of claim.

An employee will have a claim for damages if they can show that the termination of their employment was in breach and caused them loss.

The purpose of damages is to put the employee in the position they would have been had the contract not been breached in the first place. Damages in the Employment Tribunal are capped at a maximum of £25,000 however no such cap applies where a claim is brought in the civil courts.

Common wrongful dismissal claims include:

• Breach of a notice term
• Termination of a fixed term contract before it has expired
• Breach of a contractual disciplinary or redundancy procedure

Wrongful dismissal claims can become complicated when there is no written contract of employment.

Unfair Dismissal

Employees who have acquired 2 years’ service with an employer have the right not to be unfairly dismissed from their employment.

A dismissal will be unfair unless:

1. An employer can show that the reason or principal reason for the employee’s dismissal was one of five potentially fair reasons.
2. The Employment Tribunal finds that in all the circumstances (including the employer’s size and administrative resources) the employer acted reasonably in treating that reason as a sufficient reason for dismissal

Employee with less than 2 years’ service

If an employee has less than 2 years’ service then they do not qualify for unfair dismissal rights however there are some exceptions to this rule. The biggest exception is where a dismissal is classed as ‘automatically unfair’. For example, if an employee was dismissed because they made a flexible working request then this would be an automatically unfair dismissal regardless of how long they have worked for their employer.

Even where an employee does not have enough service to make a claim for unfair dismissal this does not mean they will not be able to bring other types of employment claims.

It is therefore always a good idea to carefully consider the reasons for contemplating an employee’s dismissal and explore options where possible, sometimes a conversation with an employee can clear up any misunderstandings or improve their performance where this is not at the required standard. If the situation can be rectified or improvements are made then ultimately it will make an organisation look reasonable in its approach to such issues and can also save on additional recruitment and training costs.

Potentially fair reasons for dismissal

Under employment law there are five potentially fair reasons an employer can rely on in dismissing an employee. These are:

• Capability – this relates to the employee’s capability to do the job that they were employed to do. It can also cover ill-health dismissals however if the illness relates to or amounts to a disability then extra care will need to be taken so as not to breach anti-discrimination laws.
• Conduct – this relates to the conduct of the employee and could be a single act of serious misconduct (known as gross misconduct) or a series of acts that are less serious.
• Redundancy – this is where termination of the employee’s employment was on grounds that the employee was redundant.
• Illegality – this is where the employee could not continue to work in the position they held without either the employer or the employee contravening the law or a duty imposed by the law.
• Some other substantial reason – this reason is designed to catch potentially fair dismissals that would not necessarily fall into the other categories mentioned above. An employer is only required to establish a reason for the dismissal which is of a kind that could justify the dismissal of the employee.

Reasonableness of the dismissal

Where an employer is defending a claim for unfair dismissal, they will not only need to establish a potentially fair reason but will also need to show that they acted reasonably in all the circumstances. This usually involves the employer following a fair dismissal procedure and then reaching a decision which falls within the ‘range of reasonable responses’ available to them.

Fair dismissal procedure

What amounts to a fair dismissal procedure will depend on the reason given for the dismissal.

With capability and conduct issues, an employer will need to ensure that it follows the ACAS Code of Practice on disciplinary and grievance procedures (the Code). Under the Code, where an employer is considering a case of alleged misconduct or poor performance, they should:

• Investigate the issues
• Inform the employee of the issues in writing
• Conduct a disciplinary hearing or meeting with the employee
• Inform the employee of the decision in writing and include a right of appeal

The Code essentially sets out the minimum standards in respect of a fair procedure and where an employer unreasonably fails to follow the Code and a claim is brought in the Employment Tribunal, the Tribunal can increase an award of compensation by up to 25%.

With a redundancy situation, whilst there is no Code to follow, an employer will still need to ensure it carries out a fair redundancy process. This will include a number of stages such as warning and consulting employees about redundancies, carrying out a fair selection process, considering suitable alternatives to redundancy and providing employees with a right to appeal a redundancy decision. Where an employer is making 20 or more staff redundant then they will need to ensure they comply with the collective consultation rules which must be followed.

The ‘range of reasonable responses’ test

In a claim for unfair dismissal, an Employment Tribunal will decide whether an employer’s decision to dismiss the employee fell within the range of reasonable responses that a reasonable employer in those circumstances and in that business might have adopted.

This involves consideration of the reasonableness of the employer’s conduct and the facts known to the employer at the time of the dismissal.