A dismissal occurs when you terminate an employee’s contract of employment. Employees who have 2 years’ continuous service with your business have the right not to be unfairly dismissed.
However, there are a number of reasons that are classed as automatically unfair – which do not require any qualifying service period at all. Unlawful discrimination for example, can be claimed by an employee from their first day of employment.
How to avoid unfair dismissal claims
As an employer, you should be mindful not to think that employees with less than 2 years’ service have no employment rights at all.
Reasons for dismissal can vary, but there are potentially some fair reasons for dismissal, depending on the circumstances. These reasons fall under the categories of:
- redundancy from their job role
- the employee would not be able ton continue their role without breaching a statutory restriction
- employee conduct
- capability or qualifications of the employee
- another substantial reason
What steps can be taken for wrongful dismissal?
Ensure you follow a fair process if you plan to terminate an employment. Firstly, check your staff handbook to find out about your business’s dismissal process. This makes sure your business is protected if you abide by your own dismissal processes.
You must follow the Acas Code of Practice on Disciplinary and Grievance Procedures in addition to your own dismissal processes. Acas is an independent organisation that helps handle workplace disputes. This code should be followed if you plan to dismiss an employee for misconduct, poor performance, or something else you claim is their fault. Even if you plan to dismiss an employee for another reason, the code is a good guide as to what your dismissal process should involve.
Typically, dismissal follows these steps:
- Investigation into the circumstances of the dismissal
- Initial letter stating the issue
- Dismissal meeting before a decision is made
- Employer’s decision via letter or email
- Chance to appeal if the employee disagrees with the employer’s decision
Can an employee be reinstated after wrongful dismissal?
If you go to Tribunal, and you are found guilty of dismissing an employee unfairly, technically they can be reinstated in their old job role, if all parties agree. Even if reinstatement is ordered, a Tribunal cannot force you to take back an unfairly dismissed employee. Orders for reinstatement occur in less than 1% of unfair dismissal claims.
How much compensation can an employee claim for unfair dismissal?
If a tribunal decides your employee has been unfairly dismissed, they are awarded compensation. The amount awarded is made up of:
- a fixed sum calculated to a set formula – this is called a ‘basic award’
- compensation for the money lost as a result of job loss
The amount for the basic award depends on:
- how long your employee worked for you when they were dismissed
- how old they were when they were dismissed
- their weekly pay before tax and national insurance deductions
There’s a maximum amount for a week’s pay. For dismissals on or after 6 April 2021, the amount is £544. If their gross weekly pay is more than £544, they can only claim up to £544 a week.
What is a Settlement Agreement?
A Settlement Agreement is a legal document, given to employees by employers in the instance of employment termination. Typically, the employment terminates on a specific date (called the Termination Date), and the employee is paid up until that date, usually together with a Compensation Payment.
A Settlement Agreement is agreed upon instead of attending Tribunal. I advise you what those potential claims might be worth in a Tribunal and then together we can decide whether you should offer the employee the chance to sign a Settlement Agreement.
If you are an employer and are contemplating dismissing an employee, we recommend that you seek advice at an early stage to ensure that you comply with your legal obligations, minimising the risk of legal action arising from a dismissal.