The fine line of a fair dismissal

10 May 2018

Any employee dismissed after accruing two years’ continuous service have the right to bring an unfair dismissal claim to an employment tribunal. And following the abolition of employment tribunal fees in 2017, they can now do this at no cost to themselves. This has already led to a rise in employment tribunal claims, so it is a good idea to ensure that you and your organisation have a clear understanding of the risks and some mitigating strategies you can deploy when dismissing.

What are unfairly dismissed employees entitled to and in what circumstance?

Unfairly dismissed employees can be awarded compensation by an employment tribunal of up to one year’s lost income (capped around £95,000 for higher earners) from their employer or be given their job back. Compensation can be increased by up to 25 per cent if the employer fails to follow the ACAS Code of Practice (the Code) as outlined below.

How does an employer fairly dismiss?

  1. There must be a potentially fair reason for the dismissal. 
  2. A fair process must first be carried out.
  3. The decision to dismiss must be reasonable in all the circumstances.

What are the potentially fair reasons?

Conduct, capability, redundancy, illegality or another substantial reason which justifies dismissal. Examples of substantial reasons might be a clash of personalities or a customer request that the employee no longer services their account.

What does a fair dismissal process look like?

Fair processes vary depending on the reason for dismissal. In the case of dismissals for misconduct for example, it will involve at a minimum:

  • a reasonable investigation;
  • holding a disciplinary hearing;
  • confirming the outcome decision in writing;
  • offering a right to appeal against the decision; and
  • giving the employee the right to bring a companion to the disciplinary and appeal hearings.

The Code sets out the rules employers should follow when carrying out a disciplinary process concerning misconduct or capability. Employers should ensure that their disciplinary and performance management procedures, at the very least, comply with the Code. 

When is a decision to dismiss reasonable in the circumstances?

Before making a decision to dismiss, all the circumstances of the case should be considered and the decision maker must have evidence to support the conclusions they make. Factors which should be taken into consideration include:

  • the seriousness of the alleged conduct;
  • the harm it caused or had a real likelihood of causing (that harm could be physical, psychological, financial or reputational);
  • the size and resources of the employer; and
  • whether there are any mitigating factors, which may include the reason for the employee’s acts, their length of service and their disciplinary record.

This is not an exhaustive list and there may be other factors which should be considered. 

Common mistakes

Making minor mistakes in the disciplinary process will not usually result in a dismissal being deemed unfair by an employment tribunal. However, the more mistakes made and the more material they are, the more likely it is that the unfair dismissal claim will succeed.

Examples of commonly made mistakes which employers can easily avoid include:

  • during the investigation only looking for evidence to support the allegations rather than also looking for evidence to exonerate the employee;
  • not providing the employee with all the evidence which will be relied on at the disciplinary hearing at all or not doing this sufficiently in advance;
  • not taking notes at the disciplinary hearing;
  • not informing the employee in writing that they have the right to bring a companion to the disciplinary and/or appeal hearing;
  • not giving the employee a reasonable period of time to prepare for the hearing;
  • not explaining how they came to their conclusions in the disciplinary outcome letter and the reason for the sanction given; and
  • not having someone impartial and more senior deal with the appeal.

If you have any concerns about the dismissal process or employment tribunals, please contact Carolyn Brown, Charlie Barnes or your usual RSM contact.