Legal Article - Employment Law

Termination of a Contract of Employment

Employee / employer relations play an important part of the functionality of a business. A good workforce and positive team morale can result in a successful company.

However, there may be occasions where an employer needs to terminate a contract of employment. This can be for many reasons including redundancy, poor performance or reorganisation of a business.

There are strict guidelines which employers must adhere to in order to remain fair to the employees whose contracts are being terminated.

Notice of Termination of Employment

Notice of Termination of Employment

Both the employer and the employee are entitled to a statutory minimum period of notice of termination of employment. After one month’s employment, an employee must give at least one week’s notice irrespective of length of service. Within the first month of employment, no notice need be given. The contract of employment can require a longer notice period to be given by the employee, which can vary with length of service.

An employer must give an employee at least one week’s notice after one month’s employment, two weeks’ notice after two years, three weeks’ after three years, and so on, up to 12 weeks after employment lasting 12 years or more. If the contract of employment requires the employer to give longer notice, this takes precedence over the statutory requirements.

Either employers or employees can waive their rights to notice or give and accept payment in lieu of notice (see Wrongful Dismissal below). Also, either party can terminate the contract without notice if the conduct of the other justifies it (known as Constructive Dismissal if the employee does so, and Dismissal for Gross Misconduct if the employer terminates the contract).

Employees are normally entitled to receive payment during the statutory notice period. This is particularly true if they are given notice whilst being incapable of work because of sickness or injury, or absent wholly or partly because of pregnancy or childbirth, or laid-off i.e. if an employee is ill when given statutory notice of termination the employer must pay normal earnings, even if the employee has exhausted all sick pay entitlement or has not been receiving any other payments.

What is an Employment Dismissal?

What is an Employment Dismissal?

A dismissal occurs when;

• The employer terminates the employment contract, with or without notice

• The expiry of a fixed term contract without its renewal

• The employer refuses to allow an employee to return to work after a period of Maternity absence where they have a legal right to return

• The employee resigns, with or without notice, because the employer’s conduct has substantially breached an express or implied term of the contract of employment (known as Constructive Dismissal) e.g. arbitrarily demotes an employee to a lower rank or poorer paid position, or provides an unsafe system of work, or undermines trust and confidence between the employer and employee, or unilaterally reduces pay or takes away an important fringe benefit.

If, after being given notice of dismissal by the employer, an employee gives due notice, whether written or not, to terminate the contract of employment at an earlier date, the employee is still regarded as dismissed by the employer, but the dismissal date is the date that the employee’s own notice takes effect.

When a contract of employment is terminated for the following reasons it does not count as a dismissal, so an employee cannot claim Unfair Dismissal.

The reasons are:

• The employee resigns with or without notice, so long as he is not forced to resign by the employer’s actions. Once notice has been given the employee cannot unilaterally withdraw it, but if the employer cuts short an employee’s notice period this converts the resignation into a dismissal

• Both parties voluntarily agree to terminate the contract e.g. to retire early.

Note, however, that voluntary redundancy in response to a genuine redundancy is still a dismissal, and when an employee fails to return to work after an extended holiday, a dismissal still occurs even if the employee signed a statement that failure to return will result in automatic termination of the contract

• The employee is taken on to carry out a specific task, completion of which will terminate the contract without the need for a dismissal or resignation (i.e. termination by performance)

• Some contracts are automatically terminated by operation of the law. These normally occur when a business closes due to the death of the owner or business failure (a redundancy payment may be due however)

• In a transfer of undertakings situation an employee objects to becoming an employee of the transferee company

• The contract is frustrated when, through neither parties fault, some reasonably unforeseeable event occurs which makes the contract impossible or unlawful to perform e.g. sudden serious illness or disability or imprisonment of an employee. This is very difficult to prove and an employer is recommended to treat it as a dismissal and follow fair dismissal rules.

Wrongful dismissal: Breach of Contract

Wrongful dismissal: Breach of Contract

This refers to any dismissal where the employer breaches a term of the contract of employment in carrying out the dismissal. In most circumstances this occurs when the employer does not give sufficient notice of termination of employment (i.e. the employee is entitled to 12 weeks notice and the employer only gives 6 weeks notice).

Once an employee has completed 6 months continuous service, they are then eligible to claim compensation for wrongful dismissal. 

The employee’s remedy is to seek damages from the County Court or Employment Tribunal.

If the employer makes a payment in lieu of notice, providing this covers the financial loss the employee suffered through not being given proper notice, then for all practical purposes there is no incentive for the employee to take the matter further. The payment in lieu should cover the loss of net salary and any benefits with a monetary value.

If the contract of employment states that the employer has a right to make a payment in lieu of notice, any such payment is subject to Income Tax and National Insurance deductions, which must be paid to the Government.

Where the contract is silent and the employee has no reasonable expectation of receiving a payment in lieu of notice, then when payment in lieu of notice is given no Income Tax or National Insurance need be paid. The employer can thus pay gross wages or net wages and keep the tax and national insurance.

This payment is classed as “damages” for breach of contract and not “pay”.

Where an employer unilaterally changes the terms and conditions of employment without having a right to do so and without proper notice, an employee can treat this as a breach of contract and either carry on working under protest and subsequently claim damages, or resign. This would be a wrongful dismissal.

However, if the employer gave the correct notice of termination of employment before the change is implemented and offers to reengage them under a new contract of employment on different terms, the employee will not have been wrongfully dismissed.

In either case it may be an unfair dismissal however, unless the employer had a good business reason for implementing the change, has acted reasonably and the employee is not placed in too disadvantageous a position (e.g. no significant pay loss occurs; or it does not cause significant domestic problems for the employee.


Unfair Dismissal

Unfair Dismissal

This occurs when the employer dismisses an employee without having a good reason and/or acts unreasonably in the way they carried out the dismissal. An employee needs to have carried out 1 years continuous service before they are eligible for qualification of this right.

In some circumstances a dismissal is automatically unfair. This occurs if the reason for dismissal was one of the following:

I. Because of the employee’s sex, race, colour, nationality, sexual orientation or religion/politics (the latter two are most relevant in Northern Ireland although all are applicable).

ii. Because the employee is married (but not if they are single), pregnant or has given birth, or for any other reason connected with her pregnancy or childbirth, or during the statutory maternity leave period.

(NOTE: Employees dismissed for the above reasons would normally claim sex or race discrimination as the compensation payable is likely to be higher and no length of service is required).

iii. Because the employee was, or proposed to become, a member of an independent trade union; or had taken part, or proposed to take part, in the activities of an independent trade union, if the activities were outside working hours or in accordance with an arrangement with the employer permitting the employee to take part in such activities during working hours; or that the employee was not a member of a trade union, or had refused or proposed to refuse to become or remain a member.

iv. Because the employee took, or proposed to take, certain specified types of action on health and safety grounds such as to

• carry out or propose to carry out any activities which they are designated by their employer to carry out in connection with preventing or reducing risks to health and safety at work; or

• perform or propose to perform any functions they have as official or employer acknowledged health and safety representatives or committee members; or

• bring to their employer’s attention, by reasonable means and in the absence of a representative or committee with whom it would be reasonably practicable for them to raise the matter, a concern about circumstances at work which they reasonably believe are harmful to health or safety;

• in the event of danger which they reasonably believe to be serious and imminent and which they would not reasonably be expected to avert, leave or propose to leave the workplace or any dangerous part of it, or (while the danger persists) refuse to return; or

• In circumstances of danger, which they reasonably believe to be serious and imminent, take or propose to take appropriate steps to protect themselves or other persons from the danger.

Whether or not the steps, which an employee takes to protect him or herself or others from dangers, are “appropriate” will be judged by reference to all the circumstances including, in particular, the employee’s knowledge and the facilities and advice available at the time.

Also it will not be unfair for an employer to dismiss an employee (or subject them to any other detriment) if it was, or would have been, so negligent for the employee to take the steps they took, or proposed to take, that a reasonable employer could have reacted in that way.

v. Because the employee sought, in good faith, to assert a statutory employment protection right by either bringing proceedings against the employer to enforce the right or by alleging in some other way that the employer has infringed the right. To benefit from this protection, employees do not necessarily have to specify the right they sought to assert, so long as they made it reasonably clear to the employer what that right was.

Provided that they have acted in good faith, employees are protected regardless of whether or not they did in fact qualify for the right they sought to assert and regardless of whether or not that right had in fact been infringed.

The main rights covered by the new protection are those relating to:

• written statement of employment particulars;

• itemised pay statement;

• guarantee pay; -

• Remuneration during suspension on medical grounds;

• Time-off for public duties;

• time-off to look for work or make arrangements for training prior to redundancy;

• Time-off for ante-natal care;

• Protection from unlawful deductions from pay;

• Protection against unlawful receipt of payments by employer; protection against detriment in health and safety cases;

• Minimum period of notice;

• Deduction of unauthorised or excessive union subscriptions;

• requiring the employer to stop payment of a contribution to a union’s political fund;

• Action short of dismissal on trade union grounds; and

• Time-off for trade union duties and activities.

vi. Where the employee has a “spent” conviction.

vii. The employee is a protected or opted-out shop worker and refuses to work on Sundays;

viii. Where a business or part of a business is transferred from one employer to another and the employee is dismissed by either the old or new employer mainly because of the transfer and there are no economic, technical or organisational reasons entailing changes in the workforce to justify their dismissal.

ix. Working Time and National Minimum Wage Rights.

Who can complain of Unfair Dismissal?

Any employee with one year or more continuous service with the employer, irrespective of the number of hours worked per week. The one year service is in reality 11 months and three weeks as employees have the right to add the one week’s statutory notice entitlement to their length of service. Only employment from an employee’s sixteenth birthday counts towards service.

Where the reason for dismissal is for trade union membership reasons, pregnancy or maternity or for exercising a statutory employment protection right, or for specified types of action on health and safety grounds or for refusing Sunday work (see (d) above), any employee may make a complaint (i.e. there are no service or age restrictions).

Who cannot complain of Unfair Dismissal?

Those who are not employee’s e.g. self-employed, independent contractors, YT trainees, agency workers, free-lance agents. Employees who have not completed one year’s continuous employment with their employer before their effective date of termination (i.e. the date on which the dismissal takes effect, except where the employee has not been given the required statutory notice, in which case the effective date of termination is the date on which that notice would have expired if it had been given).

This qualification is reduced to one month where an employee is dismissed on medical grounds in consequence of certain health and safety requirements and no service requirement is necessary for dismissals for trade union reasons, exercising a statutory employment right, taking action on health and safety grounds, pregnancy or maternity, or for refusing Sunday work, or who have been discriminated against on the grounds of sex, race or disability. (This list is not exhaustive).

Employees with fixed-term contracts for one year or more where the dismissal consists only of the expiry of the contract without renewal and the employee has previously agreed in writing to forego their right of complaint in such circumstances.

Employees who ordinarily work outside Great Britain under their contract of employment.

Employees who have reached a settlement with their employer, either with ACAS conciliation or on the basis of a “compromise agreement” reached with the benefit of independent legal advice, in which they waive their right to make a complaint in relation to the dispute to which the settlement relates.

Fair Dismissal

Fair Dismissal

A dismissal will be fair if the employer can show that the reason for it was related to

• The employee’s capability or qualification for the job (this can include ill health dismissals)

The employee’s conduct (or rather misconduct, including persistent short periods of absence)

• Redundancy (i.e. broadly where the employer’s need for employees to do certain work has ceased or diminished or is expected to do so)

• A statutory restriction on either the employer or the employee which prevents the employment being continued (e.g. loss of driving licence; no work permit)

• Some other substantial reason which could justify the dismissal (e.g. business reorganisation, third party pressure to dismiss, personality clashes).

If the employer cannot demonstrate the reason for dismissal was one of the above, the industrial tribunal will decide it was unfair.

Even if the employer can demonstrate the dismissal was for one of the above reasons, they must still show that they acted reasonably in the circumstances (including the size and administrative resources of the undertaking) in treating that reason as sufficient to justify dismissing the employee.

What this means in practice, based on case law from the courts, for different types of dismissal is described in the section below on Practical Implications.

Written Statement of Reasons for Dismissal

Employees with one year service or more who have been dismissed may request from their employer (either orally or in writing) a written statement of the reasons for their dismissal. The employer must provide this statement within 14 days of the request.
Employees who are dissatisfied because they have not received a statement or believe the statement to be inaccurate may refer the matter to an industrial tribunal.

Women who are pregnant or on statutory maternity leave who have been dismissed are entitled to receive a written statement of the reasons for their dismissal, regardless of whether or not they have requested one and regardless of their length of service.

Unfair Dismissal Remedies

Unfair Dismissal Remedies

An employee who has been unfairly dismissed has a choice of one of three remedies:
• Reinstatement
• Re-engagement
• Compensation


This has the effect of the employee going back into his job as if nothing had happened.

A Tribunal must consider, in deciding whether to make an order for reinstatement:
• Whether the employee wishes to be reinstated
• Whether it is practical
• If the employee contributed to his dismissal, whether it would be just to order reinstatement.


This is putting the employee into a different but comparable job to the original employment.

A re-engagement order will specify:
• The employer’s identity
• The nature of employment
• Remuneration
• Arrears
• The rights and privileges to be restored to the employee, and
• The date by which the order must take effect.

The Tribunal cannot listen to the argument that the employee has been replaced unless:
• It was not practicable to arrange for the work to be done any other way or
• A reasonable time had passed without the employer being aware that reinstatement or reengagement would be requested.

An employer may argue against reinstatement or re-engagement on the ground that it would have a poor effect on industrial relations but this must be substantiated. Refusal to comply with a reinstatement or re-engagement order may result in an additional compensatory award being made.


If an Industrial Tribunal find that a dismissal was unfair and re-instatement or reengagement are not options, they will go on to assess compensation (or allow the parties to do so). Awards may consist of four elements:
• Basic
• Compensatory
• Additional

But usually will involve only the first two elements.


Unfair Dismissal Compensation

Unfair Dismissal Compensation

The basic award is based on the amount of a week’s pay to a maximum of £400 per week (from 01/02/11), age and length of service. It is very similar to (although not exactly the same as) a redundancy payment. If an employee has already been paid a redundancy payment then this will offset the basic award.

The calculation involves knowing what a week’s pay is. This is the gross payment to which an employee is entitled each week. If the pay in unvaried, then the matter is simple - for weekly paid staff, it is a week’s pay, for monthly paid staff, it is a month’s pay multiplied by three and divided by 13.

If payment does vary from week to week or month to month because, say, of bonus or contractual overtime, then it is necessary to find an average over the preceding 12 weeks worked.

Pay is the amount of remuneration which is payable to the employee under the contract and may include bonus, overtime, attendance allowance, etc. It does not include benefits such as company cars.

The basic award is subject to a maximum figure and is calculated as follows:
• 1 ½ week’s pay for each complete year when the employee was 42 years of age or more

• 1 week’s pay for each complete year when the employee was 22-41

• ½ week’s pay for each complete year when the employee was below the age of 22 (unlike redundancy there is no minimum age limit).

The maximum number of years that can be taken into account is 20. As the maximum week’s pay is £400 (from 01/02/11), this gives a maximum basic award of 1½ x £400 x 20 = £12,000

If the dismissal is by reason of one of automatic unfair dismissal the basic award is subject to a minimum of £4,700 (from 01/02/11).
Compensation Award for Unfair Dismissal

Compensatory award is based on the benefit that one has lost by being dismissed. It can therefore be made up of a number of things such as:

• Take-home pay
• Value of fringe benefits
• Pension loss
• Expenses incurred
• Loss of statutory rights (usually £200).

It is subject to a total maximum of £68,400 (from 01/02/11). The losses are calculated from the date of the dismissal to the tribunal hearing and an estimate of future losses is made for the time it is likely to take to find a new job with a similar salary.

Reduction of Award

An employee is obliged to mitigate his loss and, if it can be established that they have not done so, it is possible to argue that a compensatory award should not be made at all or not past a date when they might reasonably have mitigated.

Both basic and compensatory awards may also be reduced in the following circumstances:

• The employee caused or contributed to his dismissal
• The employee unreasonably refused an offer of re-instatement.

Ex-gratia payments may be off-set against compensatory awards, depending on the circumstances of the payment (e.g. if the employer makes an ex-gratia payment of £15,000 and the tribunal estimates the total loss to be £80,000, the £15,000 will be deducted and the statutory maximum of £68,400 (from 01/02/11) will be awarded).

Payment in lieu of notice is not to be offset against compensatory award.

If an employee has been in receipt of unemployment benefit and the Tribunal assesses compensation, the Department of Trade and Industry will recoup, or take out of the award, the amount of unemployment benefit that has been paid. If parties settle themselves, recoupment is avoided.

In an unfair redundancy dismissal, the tribunal will estimate the probability of the employee being made redundant if a proper procedure had been followed and reduce the award accordingly.

Additional Award

If an employer fails to fully comply with an order for reinstatement or re-engagement then the Tribunal may make an additional award as follows

• In all cases except trade union ones, 26-52 weeks pay to a maximum £34,800 (£400x52) as from 01/02/11.

Employee Dismissal Procedure

Employee Dismissal Procedure

Any employer contemplating dismissing an employee should ask whether:

• There is sufficient reason for the dismissal
• Reasonable alternatives to dismissal have been considered
• The dismissal is consistent with previous action by the employer and any
disciplinary procedure
• The dismissal is fair, taking all relevant factors known at the time into

The precise type of action to be taken will depend in part on the reason for dismissal.

Some practical tips are given below in relation to different reasons for dismissal. A fair disciplinary procedure should be followed prior to making a decision to dismiss.

Employee Conduct

Employee Conduct

Conduct, as a reason for dismissal, is a very wide area. It covers everything from theft to poor timekeeping, fighting to insubordination, and disloyalty to disobedience. More perhaps than for any of the other reasons, it is very important that a proper procedure is carried out in cases of misconduct.
This will involve:

• Warnings
• Investigation of the facts consultation with the employee
• Consultation with the employee
• Appeal

Types of Misconduct

No list will ever be exhaustive. It is, however, advisable to describe the types of misconduct which will be thought of as more serious or less serious. For example, the less serious types of misconduct and where the full verbal - written - final warning procedure should be followed are:

• Poor timekeeping
• Absenteeism
• Unauthorised absence
• Abusive language
• Poor attitude
• Disobedience
• Personal appearance

This list is not exhaustive.

The types of misconduct which may be treated as serious or gross misconduct could include:

• Theft and fraud
• Violence
• moonlighting which seriously affects job performance or the commercial viability of the company
• Intentional falsification of records
• Drunkenness in clear breach of a written rule and where a serious risk to safety
May arise
• Possession of, or under the influence of drugs.

This list is not exhaustive.

In the absence of any definitive lists of what type of misconduct falls to be treated in specific ways, it is up to a company to make their own rules which they could, in the event, justify as reasonable. For example, an employee is caught smoking in a no smoking area, which under company rules, may be considered gross misconduct.

However, there is quite a difference between smoking in an area that is designated a no smoking area because it is extremely hazardous to do so and smoking in an area designated non-smoking after a workforce vote for environmental reasons. In the latter case, it is a minor offence, which would warrant dismissal only if the misconduct continues after warnings have been given.

Suspected Misconduct

It is often the case that an employer believes an employee to be guilty of misconduct but cannot prove it. This arises most often in cases of suspected theft, fraud or violence (i.e. who started the fight).

It is not necessary that an employer prove such misconduct. He must, however, be able to show that he had reasonable grounds for believing an employee to be guilty. It is impossible to have reasonable grounds unless there has been a full investigation and the employee has had an opportunity to respond to the allegations against him/her.

Misconduct Outside the Workplace

The extent to which an employer can take action against an employee in relation to misconduct that occurs outside of work is very much dependent on the circumstances of each case. To justify dismissing an employee, it would have to be shown that the misconduct was such as to affect or be likely to affect his/her work, or was such as to damage the employer’s business or affect relations with fellow workers.

For example an employee who is employed as a cashier in a petrol forecourt and in a position of trust with regard to handling money may reasonably be dismissed on conviction of defrauding his/her employer. On the other hand, an employer is unlikely to be able to justify the dismissal of a park flasher who works in a workshop and has no contact with the public.

Employee Capability

Employee Capability

Capability is defined in the Act as “capability assessed by reference to skill, aptitude, health or any other physical or mental quality”. Qualification also comes under the capability heading. Between them, they describe the three main areas to which this reason applies:

• Poor performance
• Lack of qualifications
• Poor health

This list is not exhaustive.

Poor Employee Performance

Poor Employee Performance

It is possible to fairly dismiss employees who are incompetent, unsuitable, sloppy, lazy or otherwise inadequate once it is clear they are harming the business. To do so the employer must have grounds for believing the employee is incompetent and be reasonable in dismissing for incompetence.

It is well established that the employer decides whether or not an employee is incompetent. The employer does not have to prove, in Tribunal, that an employee is, in fact, incompetent. What the Tribunal have to judge is whether the employer had grounds for his view and was reasonable in dismissing for it.

This does not mean an employer can simply say “They are not good enough” and leave it at that. There must be reasonable evidence, such as poor work, failure to reach targets, customer’s complaints, poor management, capability, pressure from third parties. An employer must be sure of their facts and show they took steps to investigate the facts.

This will involve discussion with the employee. Consistency is also important.

In the employment relationship, the employer, in the stronger position, also has obligations. The employer should provide:

• Sufficient instruction to the employee so he knows what their job is, to whom  they are responsible

• Methods of work, etc.

• A standard that is fair and reasonable and well known and understood

• Proper training
• Supervision and support.

No matter how incompetent an employee is, a dismissal may still be unfair if a reasonable procedure is not adopted. The proper course of action to take is as follows:

• The first step is to investigate the lack of performance and identify the problem.

This could show that the fault lies with the employer, e.g. poor training

• consult with the employee and give assistance to improve

• warn the employee of the consequences of failure to improve (it is usual to have at least two written warnings before dismissal)

• give the employee sufficient time, at each stage, to improve or show improvement

• If dismissal is considered, give the employee a last opportunity to state his case

• If possible, allow the employee the right to appeal against the decision to dismiss him/her.
The company may have a procedure for such cases. If so, IT MUST BE FOLLOWED.

Managers and senior staff generally should be aware of whether or not they are performing satisfactorily, thus the need for explicit warnings is not so important. BUT, to be safe, it is sensible to warn in the usual manner.

Probationers are obviously on trial, their performances being the measure of their future employment. However, the employer’s duty to warn, train or supervise is higher, especially with regard to employees with service who are promoted to different positions. Long service employees cannot simply stand on their length of service to avoid dismissal, although they do need to be handled very carefully.

For example, the length of time given to improve will have to reflect the long service. In cases where employees just cannot cope or fall behind with modern methods, the duty to train is reinforced. With regard to salesmen, it is especially important that you can establish any targets set (if set) are reasonable.

Required Qualifications

Qualifications relate to any degree, diploma or other academic, technical or professional qualification relevant to the position. Therefore, if you require that all your mechanics should possess a valid driving licence, this is a qualification you attach to the job.

Where an employee loses a qualification or where the policy of the company changes with regard to qualifications, it is still important to treat that employee reasonably. In a claim for unfair dismissal, you will need to establish that:

• The qualification was a necessary requirement for the job

• You have sought alternative employment for any employee who has lost or cannot obtain the necessary qualification.

Employee Health and Wellbeing

Employee Health and Wellbeing

In the case of a long term absence, caused by an employee’s physical or mental ill health, it is vital that a medical investigation is carried out before any decision to dismiss is made. This will involve:

• Consultation with the employee as to their situation

• Consultation with the employee’s doctor or medical adviser, with the employee’s permission (see example of Medical Report Form)

• finding out the nature of the illness

• finding out what likelihood there is of the employee being able to return to their old job.

If the employee refuses to allow consultation with his doctor or medical adviser (they are under no obligation to do so), the employer must act on the evidence available.

The employee must be consulted throughout and warned if dismissal is being considered.

Having investigated and warned the employee, a decision can be made, taking into account:
• Their length of service and position in the company
• The importance of their position and whether or not it can be temporarily filled
• The effect of their absence on other employees or on the company in general
• The need for complete return to health to carry out their duties
• The possibility of alternative work e.g. lighter work.

Alternative work should be considered even if it involves a loss of pay or status. It is up to the employee to accept or reject. An employer who “assumes” such a position will be rejected puts himself at risk of an unfair dismissal finding.

The basic question in every case is whether, in all the circumstances, the employer can be expected to wait any longer for their employee’s return and, if so, how much longer. If an employee is dismissed, they are entitled to full paid notice even if his/her sickness pay entitlement has expired.

Generally the same rules apply to frequent short-term absences as to long term absence if these have the same underlying medical condition. Factors to be taken into account can include the degree of disruption caused, the nature and frequency of the absences and the effect on other employees. Medical evidence should be sought as to underlying causes. Independent evidence can be sought if malingering is suspected.

The employee must be warned that their frequent absences may lead to his/her dismissal. If, at the time of employment the employer was informed of a medical condition, a great deal more tolerance of absence will be expected.
The same rules also apply to cases of industrial ill health although an employer will be expected to be even more accommodating. If the ill health is caused by something that can be rectified by the employer, it should be so rectified unless the nature of the problem, the number of employees involved and the cost involved make it unreasonable to do so.

Where frequent short-term absences are for a variety of different reasons (whether medical or otherwise) the employer is not expected to seek a medical opinion, but should apply the rules concerning misconduct dismissals (i.e. take disciplinary action based simply on the amount of absenteeism).

Statutory Bar

Statutory Bar

It is a potentially fair reason to dismiss an employee who cannot continue to work in their job without contravention, by them or their employer, of any statutory duty or restriction.

A common example is where a driver loses their licence and is banned from driving.

Another common example is employment in contravention of work permit regulation.

Reasons for Dismissal of an Employee

Reasons for Dismissal of an Employee

There exists a catch all-net in the reasons that may justify dismissal, that is “some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held”.

There is no list of the situations that can fall under this heading. Examples have included:

• Reorganisation of a business
• Personality conflicts
• Third party pressure
• The refusal to sign a necessary restrictive covenant
• Genuine, if mistaken belief.

In each case, it is a question of fact for the tribunal to decide. A reason is likely to be acceptable so long as it is not “a whimsical or capricious reason, which no person of ordinary sense would entertain”.

Reorganisations of a Business

Reorganisations often lead to redundancies in that the need for employees decreases e.g. when one person absorbs the work of another in addition to his own. But there may be circumstances where redundancy does not arise out of a reorganisation as, for example, where it involves simply a change of hours or a change of working conditions.

In such circumstances, it is necessary to show that the change was made for sound business reasons and, for it to be fair, that it was done after consultation and a reasonable attempt to find an alternative solution acceptable to the employee. It may nevertheless be unfair for a particular employee if their circumstances (e.g. domestic; financial loss) are significantly affected by the change.

Employee Personality Conflicts

Personality conflicts may come under the heading of either” conduct” or “some other substantial reason”.

These problems are notoriously difficult to deal with but may have to be. It is therefore a good idea to precede something like as follows:

• Attempt to mediate
• consider transfer, but beware of sex, race or disability
• Discrimination
• investigate causes (medical?)
• warn about consequences
• establish and indicate who, in the absence of any other solution, is to be dismissed as most at fault or, if equally to blame both to be dismissed
• keep records of conversations, attempts to mediate, disciplinary interviews etc.

Third Party Pressure

Pressure from an important customer or, from your franchise manufacturer to dismiss an employee can amount to a substantial reason. However, the reason for the third party’s pressure must be shown and it is subject to the test of reasonableness.

Disciplinary Procedures

Disciplinary Procedures

In addition to the above guidance, it is important that the advice given in the Advisory, Conciliation and Arbitration Services (ACAS) Code of Practice on Disciplinary and Grievance procedures. Codes of Practice are taken into account by employment tribunals when the Codes provisions are relevant to any question arising in the proceedings. In particular, the Code states that Disciplinary Procedures should:

a) Be in writing
b) Specify to whom they apply

c) Provide for matters to be dealt with quickly

d) Indicate the disciplinary actions, which may be taken

e) Specify the levels of management, which have the authority to take the various forms of disciplinary action, ensuring that immediate superiors do not normally have the power to dismiss without reference to senior management

f) Provide for individuals to be informed of the complaints against them and to be given an opportunity to state their case before decisions are reached

g) Give individuals the right to be accompanied by a trade union representative or by a fellow employee of their choice

h) Ensure that, except for gross misconduct, no employees are dismissed for a first breach of discipline

i) Ensure that disciplinary action is not taken until the case has been carefully

j) Ensure that individuals are given an explanation for any penalty imposed

k) Provide a right of appeal and specify the procedure to be followed.

It is important that companies have Rules. As a minimum these should:

• be simple, clear and in writing

• be displayed prominently in the workplace

• be known and fully understood by all employees

• Cover issues such as absence, timekeeping, health and safety and use of company facilities (add others relevant to your organisation)

• indicate the type of conduct which will normally lead to disciplinary action other than dismissal

• Examples may include persistent lateness or unauthorised absence

• indicate the type of conduct which will normally lead to dismissal without notice – examples may indicate working dangerously, stealing or fighting although much will depend on the circumstances of each offence.

ACAS have produced model Disciplinary Procedures and examples of letters to write covering:

• Notice of disciplinary interview
• Notice of written warning or final written warning
• Confirmation of dismissal (following previous warnings)
• Confirmation of dismissals (without previous warnings)
• Notice of result of appeal hearing.


Published: 03 Jun 2011


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