Hiring and firing is part of day to day business. But employers must ensure that any decision to dismiss an employee is lawful. Employees are protected against an unfair dismissal.
The law of unfair dismissal can be a minefield for both employers and employees. In the modern economy it’s not always clear who is an employee, with a right to make a claim. Sometimes it’s unclear whether there has been a dismissal at all. Dismissals can be for a variety of reasons, from misconduct to redundancy. It is essential that an employer follows a fair procedure, and there are many pitfalls. Successful claims can lead to reinstatement, reengagement or payments of compensation, the exact calculation of which requires expertise and skill.
The 3PB team has huge experience of all types of claim, acting for both employers and employees. The 3PB team is happy to provide assistance and advice both before and after a dismissal takes place.
A claim for unfair dismissal must be received by the tribunal within 3 months of an employee’s effective date of termination (less a day).
The tribunal may otherwise accept an unfair dismissal claim where it finds that it was not reasonably practicable to bring the claim within the 3 month period but was otherwise brought within such further period as the tribunal considers was reasonable.
Legislation provides for the modification of the time limits to allow for ACAS Early Conciliation. In summary, the legislation provides as follows:
It is exceptionally important to bring claims within the relevant time limit. If you consider that a time limit issue arises in your case then you should take legal advice without delay.
An employee who wishes to claim unfair dismissal must first show that he or she has been dismissed. An employee will be dismissed in the following circumstances:
There are some other situations of a deemed dismissal in cases of redundancy outside the scope of this summary.
In order to bring a claim of ordinary (opposed to automatic) unfair dismissal the individual must be an employee and must have two years’ service.
In order to defend a claim of unfair dismissal an employer must be able to show that it dismissed the employee for a potentially fair reason. Where there are multiple reasons for a dismissal, the tribunal will need to identify the principal reason.
There are five potentially fair reasons for dismissal:
In some situations the reason for dismissal will be automatically unfair, for example:
If such a reason applies then the dismissal cannot be fair and the question of fairness does not arise.
The burden is on the employer to show that misconduct was the reason for dismissal. According to the EAT in British Home Stores Ltd v Burchell 1980 ICR 303,EAT, a three-fold test applies. The employer must show that:
This means that the employer need not have conclusive direct proof of the employee’s misconduct — only a genuine and reasonable belief, reasonably tested.
The difference between misconduct and gross misconduct important. Gross misconduct is generally accepted to be serious misconduct which goes to the root of the employment contract such as wilful and deliberate contradiction of contractual terms and gross negligence. Some common examples are:
If there is gross misconduct then an employer may dismiss without paying notice pay. It is important for an employer to set out clear examples of what will amount to gross misconduct.
Before reaching a decision to dismiss on the grounds of conduct the employer should follow a fair disciplinary process. Some disciplinary policies are contractual which means that a failure to adhere to them might give the employee a basis to bring a breach of contract claim (it would also be relevant for assessing the fairness of the process).
It is important that employers apply a consistent approach to all employees.
If there is a potentially fair reason for dismissal, then the employer must persuade the tribunal that it was reasonable to dismiss the employee for that reason.
In deciding whether the decision to dismiss was reasonable depends on whether in the circumstances (including the size and administrative resources of the employer’s business) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, determined in accordance with equity and the substantial merits of the case.
Reasonableness can only be assessed based upon the facts known to the employer at the time of the decision to dismiss.
Employers often have at their disposal a range of reasonable responses to matters such as the misconduct or incapability of an employee, which may span summary dismissal down to an informal warning.
The tribunal is required to objectively consider whether dismissal falls within that band of reasonable responses open to an employer. In doing so, they must not substitute their own view for that of the employer.
The fairness of a dismissal will also be dependent on the internal procedure used by the employer before they reach the decision to dismiss. As with a decision to dismiss, whether the procedure used was fair is to be judged by the band of reasonable responses.
For assistance with internal procedures including investigations please visit this page.
In addition, when determining the question of reasonableness, the tribunal should have regard to the procedures set out in the ACAS Code of Practice, which is discussed under ‘ACAS Code of Practice’ below. Compensation may be increased or reduced by up to 25 per cent.
The ACAS Code of Practice can be found at the ACAS website.
Compensation for unfair dismissal is separated into the basic and compensatory awards.
The compensatory award is made on the basis of what the tribunal considers to be just and equitable. This will commonly consist of loss of earnings and pension. The claimant must take reasonable steps to mitigate any loss claimed such as by seeking alternative employment.
Where the tribunal concludes that a dismissal is unfair on procedural grounds then it will be open to an employer to argue that it made “no difference” and that the employee would have been dismissed in any event. The purpose of this argument is to persuade the tribunal that it would be just and equitable to reduce compensation to reflect the likelihood that the employee would have been fairly dismissed in any event. This is known as a Polkey deduction. It is open to the Tribunal to reduce the compensatory award by up to 100 per cent on this basis.
Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding (s.123(6) ERA). This ground for making a reduction is commonly referred to as ‘contributory conduct’ or ‘contributory fault.
The tribunal may also take any blameworthy or culpable conduct into consideration into consideration in reducing the basic award (s.122(2) ERA). It is not necessary for that conduct to cause the dismissal. Therefore, any pre-dismissal conduct may be considered.
It is possible for the tribunal to order reinstatement or reengagement of an employee. Most employers will resist any such order. Such orders are relatively rare.
For help and advice please contact Russell Porter on +44 (0)3333 231 586 or email us.
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