How to dismiss an employee fairlyOriginally published: September 2017 | Last reviewed: September 2017
Although not pleasant in any circumstance, there are times when it becomes necessary to end an employee's contract. When dismissing staff, it's essential that it's done fairly and within the law. If not, you may find yourself in hot water — such as when an employee claims unfair or wrongful dismissal.
Here, we'll cover the four types of dismissal recognized in the U.K.: fair, unfair, constructive and wrongful.
For a dismissal to be deemed fair, you must have a valid reason (and you must terminate the contract under a correct process). These reasons typically fall into one of the following three categories:
- The employee's capability or conduct. You can dismiss an employee if he or she is incapable of doing the job to the required standard, the employee is capable but unwilling to do the job properly or the employee has committed some form of misconduct (such as fraud or intimidating other staff members). Keep in mind that you must consider as many ways as possible to help the employee back into work if he or she is unable to do the job due to illness. (Here's guidance on dismissals due to illness from GOV.UK).
- Redundancy. An employee is made redundant if his or her job is no longer needed. However, you must be able to provide a sound business rationale to prove that's the case. Reasons for redundancy may be that the organization is undergoing a restructure or change, technology is replacing the job, or the organization is moving location or closing down.
- Something that legally prevents the employee from doing the job. Examples include a lost driver's license or medical license, or a failed DBS (Disclosure and Barring Service) check.
Of course, other substantial reasons for dismissing an employee are possible, too, such as roles that are clearly defined as temporary from the outset (such as maternity cover).
In some cases, a dismissal is automatically classified as unfair. Unlawful reasons for dismissal include:
- Pregnancy or maternity leave
- Parental leave, paternity leave (birth and adoption), adoption leave or time off to care for dependents
- Acting as an employee or trade union representative
- Acting as an occupational pension scheme trustee
- Membership or nonmembership in a trade union
- Working part-time or being a fixed-term employee
- Discrimination, such as on the grounds of age, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion, beliefs (in Northern Ireland, specifically including political beliefs), sex or sexual orientation, or pay or working hours (including Working Time Regulations, annual leave and National Minimum Wage)
- Whistleblowing (exposing wrongdoing in the workplace)
There are further reasons that may be deemed to be unfair but may need a tribunal to decide, such as compulsory retirement or taking part in lawful industrial action.
In other cases, an employee may believe that he or she has been dismissed unfairly — even if you consider it a fair dismissal. From an employee's point of view, a dismissal may be considered unfair if:
- The reason you gave for the dismissal wasn't the real one
- The reason for the dismissal was unfair (for example, saying the employee wasn't doing the job to the required standard when the employee believes that not to be true)
- You acted unreasonably (for example, by failing to give the employee warnings or opportunities to improve before dismissal)
Constructive dismissal refers to a situation in which an employee is forced to leave a job due to your conduct as an employer. The reasons for leaving must be serious — not simply because you don't get on, for example.
Reasons for constructive dismissal may include:
- Not paying the employee
- Demoting the employee for no reason
- Knowing about bullying or harassment and not acting on it
- Making the employee accept unreasonable changes to his or her role (such as requiring the employee to work night shifts when the contract calls for day shifts)
Wrongful dismissal is characterized by a breach of contract — such as ending the worker's employment without sufficient notice, as set out in the contract. Note that wrongful dismissal is distinct from unfair dismissal, which isn't about a breach of contract but about you having sufficient reason to dismiss the employee.
How to dismiss an employee
If you must dismiss an employee, ensure that you act fairly, reasonably and sensitively during the process. If you're an employer in England, Scotland or Wales, you must follow the advice set out in the Advisory, Conciliation and Arbitration Service (Acas) code of practice. In Northern Ireland, it's best practice (although not a legal requirement) to follow the Labour Relations Agency (LRA) code of practice.
The repercussions of not following the code could include being taken to an employment or industrial tribunal and paying compensation to the employee.
Also take care to remember the employee's rights. The employee has the right to use a third party or union representative to help solve the issue by mediation, conciliation or arbitration. If resolution isn't possible and you proceed with dismissal, the employee may take his or her case to an employment tribunal or, in Northern Ireland, an industrial tribunal — as long as the claim is made within three months of being dismissed.
Similarly, be alert to other time sensitivities associated with unfair dismissal claims. A worker classed as an employee who started the job on or after 6 April 2012 must typically have worked for you for 2 years to be able to bring a claim for unfair dismissal. If the start date was before 6 April 2012 or you operate in Northern Ireland, the qualifying period is normally 1 year.
This article was produced with expertise from Work LDN, a London-based company that provides human resources outsourcing and specialist recruitment services.
Looking for U.S.-specific guidance? Read about terminating a U.S. employee.