It is important that you take advice before dismissing an employee, because, if not handled correctly, an employee may bring one or more of the following claims against you:
1. Unfair dismissal
In order to be able to make a claim for unfair dismissal, an employee must have at least 51 weeks of service with the Company and be an employee working in the UK. There are some exceptions to this requirement meaning that in some cases, employees with less than 51 weeks of service can make a claim, e.g. dismissals related to a protected disclosure, paternity leave and the minimum wage.
A dismissal is automatically unfair if it is for one of a number of prescribed reasons, including whistleblowing, health and safety activities, pregnancy, etc. Otherwise, a dismissal is unfair unless the employer can:
establish that the dismissal was for one of the legal reasons justifying dismissal; and
that it acted reasonably in dismissing for that reason.
The employer may rely on the following reasons to justify the dismissal:
- The conduct of the employee.
- The capability or qualifications of the employee, e.g. long-term absence.
- Illegality.
- Redundancy.
- ‘Some other substantial reason’, e.g. pressure from a third party customer.
Even if the dismissal can be justified by the employer, it may still be unfair if the employer has failed to follow a fair process as outlined in the Acas Code of Practice, introduced in April 2009.
If an employer unreasonably fails to follow the Acas Code of Practice, the Employment Tribunal has discretion to increase any compensatory award it makes against it by up to 25 per cent (and to reduce it by up to 25 per cent if an employee fails to follow it).
Constructive dismissal
Constructive dismissal is a form of unfair dismissal and occurs when an employer commits a ‘fundamental breach’ of the contract of employment, e.g. unilaterally varying an employee's benefits or duties. This breach entitles the employee to resign, treat themselves as having been dismissed and to make a claim against the employer for unfair dismissal. However, the employee has to act quickly and not delay terminating their contract.
Any employee who makes a complaint about constructive unfair dismissal to an Employment Tribunal without having first raised a grievance is at risk of having any compensatory award made to them by the Employment Tribunal reduced by up to 25 per cent for failure to follow the Acas Code of Practice.
Employers should be aware that a grievance may present itself in a variety of forms and may not even mention that it is a grievance. However, if an employer receives any form of communication from an employee or their adviser highlighting any potential grievance, it is advisable to treat it as one and investigate the matter. It is important that employers act as failure to follow the Acas Code of Practice could result in an increase to any compensatory award made against the employer by up to 25 per cent.
Potential Tribunal awards
An employee who alleges unfair dismissal can claim compensation for unfair dismissal can include both a basic award (currently £11,400 maximum), and a compensatory award (currently £65,300). The basic award is calculated based on the employee’s age, length of service (up to a maximum of 20 years) and gross weekly pay (subject to a statutory maximum, currently £380 per week).
Alternatively, an employee might ask for either reinstatement (returning to their old job, as though they had not been dismissed), or re-engagement (returning to a different job with the same employer). In either case, their employment must be treated as though they had not been dismissed at all.
2. Discrimination
A dismissal is discriminatory if it is related to the employee’s:
- Sex, or marital or civil partner status.
- Colour, race, nationality or ethnic origin.
- Disability.
- Sexual orientation.
- Religious or philosophical beliefs.
- Age (save where he has reached retirement age, and the statutory procedure requiring the employer to notify him that he may request to work longer has been complied with). But see the comments regarding the Heyday challenge above.
Discrimination can be direct, against a particular employee, or indirect, because a provision, criterion or practice discriminates against a particular group of employees compared to another group.
The employee can make a claim for discrimination regardless of the length of time they have been employed.
Employee’s claim
There are no upper limits on the amount of the award unlike unfair dismissal cases. Furthermore, an employee who is successful in their discrimination claim may also be entitled to compensation for injury to feelings.
3. Wrongful dismissal
The most common wrongful dismissal claim occurs when an employee has been dismissed without the correct notice or without pay in lieu of notice.
When dismissing an employee fairly for an act of gross misconduct, an employer will not have to pay notice. However, if the dismissal is not related to gross misconduct, the employer should observe the notice period contained within the employee’s contract and provide at least the statutory minimum notice which is:
one week for less than two years of service but more than one month
one week's notice for each complete year of service, up to a maximum of 12 weeks' notice for employees who have completed over two years of service.
If employers do not want their employees to serve their notice, they should consider inserting a term into the contract of employment which gives the employer the right to pay the employee in lieu of notice. If there is no such provision in the contract but the employer decides to pay their employee in lieu of notice (and not require them to serve their notice), this is technically a breach of contract, and we would encourage employers contact Suki Harrar or Ian Besant directly for further advice.
There is no minimum qualifying period of employment before an employee can claim for wrongful dismissal.
What the employee can claim
If an employee has been dismissed wrongfully, they can claim damages from the employer to put them in the position they would have been if the breach had not occurred. For example, if notice has not been aid, damages will be a sum equal to salary and any benefits payable during the notice period.
If the employee believes they are entitled to more than an Employment Tribunal can award in such cases (currently £25,000), they can decide to take the claim to a civil court instead, where damages are unlimited. They cannot bring a claim in both.
Employees are expected to do all they can to mitigate their losses by seeking alternative comparable employment. In establishing the level of damages, an Employment Tribunal takes into account any money that the employee has earned from new employment during the notice period. If the employee has not found any further employment, they must still be able to evidence that they have made a conscious effort to find alternative work.
Time limits
All claims made at Tribunal must be made within 3 months less one day of the effective date of termination. Therefore, if an employee was dismissed on 1 May and asked to serve their one month of notice (and so their last working day was 1 June), any claim to the Tribunal would have to be made by 31 August. If the employee was dismissed on 1 May and paid in lieu of notice (so that their last working day was 1 May), they would have until 31 July to make a claim.
If the employee misses a deadline for filing a claim, the Employment Tribunal has the discretion to extend time if the employee can show that it was not reasonably practicable to present the claim within the three-month period. Time can also be extended in discrimination cases when to do so would be ‘just and equitable’.
If the claim is one that can be brought in the civil courts (i.e. for wrongful dismissal), an employee has six years to make a claim there. The court has discretion to extend time in some situations.
