By: Simon B
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Dismissing Staff and Redundancies
Firstly, you must give the employee sufficient notice. Notice periods are often contained within an employment contract, but if not, the employee is entitled to a minimum statutory notice period, based on their length of service, as detailed below (these also apply to staff on probation):
|LENGTH OF TIME WORKED FOR EMPLOYER||AMOUNT OF NOTICE YOU MUST GIVE|
|Less than a month||No notice period, though the employee is entitled to “reasonable” notice, which will usually be based on how often they are paid|
|One month or more||One week’s notice|
|Two years or more||Two weeks’ notice|
|Every additional year beyond two years||One additional week’s notice, up to a maximum of 12 weeks|
You must abide by certain rules for a dismissal to be considered fair in the eyes of the law. Other types of dismissal are unfair, constructive and wrongful. If you do not dismiss an employee in a fair manner then you may face a claim from your employee.
Whether a dismissal is fair or unfair depends on the reason for the dismissal, and how the dismissal is carried out by you, the employer.
Fair reasons for dismissal
For a fair dismissal, you must have a good reason for dismissing the employee. Reasons which can serve as grounds for a fair dismissal include:
- The employee is incapable of doing the job to the standard required
- They are capable but unwilling to do the job to the required standard
- Their conduct has been questionable
- Redundancy (see below)
- There are legal reasons why they are unable to do the job, such as losing a driving licence
- If it is no longer possible to continue employing the person, for example, if the workplace has burned down.
Unfair reasons for dismissal
There are a number of reasons for dismissal which are known as ‘automatically unfair’. For example, you cannot dismiss an employee fairly because:
- They are pregnant or on maternity leave, or any reason related to this
- They take time off for family reasons
- They act as an employee representative, trade union representative or occupational pension scheme trustee
- They have joined or not joined a trade union
- They working part-time or on a fixed-term contract
- Of a discriminatory reason
- Of reasons relating to pay and working hours
- They report on wrongdoing at work (whistleblowing)
Dismissing an employee for any of these reasons will automatically be deemed unfair.
In the case of employees taking strike action, it is automatically unfair to dismiss an employee for taking official strike action within 12 weeks of the action commencing or if it has lasted more than 12 weeks and you haven’t taken reasonable steps to resolve the dispute.
In addition to these reasons, a dismissal could be considered unfair if the employee has been treated in a different manner to other employees.
A fair dismissal process
For a dismissal to be fair you must act ‘reasonably’ throughout the dismissal and the preceding disciplinary process.
While reasonable behaviour in this context is not explicitly defined legally, for an Employment Tribunal to judge that you have acted fairly you will usually have to:
- Genuinely believe that the reason for the dismissal was fair
- Carry out proper investigations when appropriate
- Follow the relevant procedures
- Inform the employee of why they were being considered for dismissal and listened to their views on the matter
- Allow the employee to be accompanied at any hearings
- Give the employee chance to appeal
Dismissing a member of staff on sickness grounds
An employee’s ability to do their job may be affected by a long-term illness. In these cases, before considering dismissal, try to help them back to work. You can do this through:
- Getting a medical report from the employee’s GP
- Arranging an occupational health assessment
- Determining whether they are considered disabled under the Equality Act 2010 and making reasonable adjustments to help them carry out their role.
If reasonable adjustments cannot help the employee to do their job, it may be fair for you to dismiss them, even if they are disabled. You must still ensure that a fair procedure is followed, however.
Claims for unfair dismissal
If an employee believes that you have dismissed them unfairly, then they can lodge a claim at the Employment Tribunal, who will make a judgment on whether the dismissal was fair or unfair. Unless the employee was dismissed for an automatically unfair reason, they must have worked for you for a minimum amount of time in order to be eligible to do so. This is shown in the table below.
|DATE WHEN EMPLOYMENT STARTED||WHEN EMPLOYEE CAN MAKE A CLAIM|
|Before 6 April 2012||After the first year of employment|
|After 6 April 2012||After the second year of employment|
There are a number of other exceptions which mean that certain groups of people are not eligible to claim unfair dismissal. These are:
- The self-employed
- Independent contractors
- Members of the armed forces
- Employees who have already reached a settlement with their employer through Acas
- Those employed under an illegal contract
- Those covered by a dismissal procedure agreement which is except from unfair dismissal rules
- Taking part in official industrial, unless the reason is automatically unfair (see above)
- Police staff, except in cases relating to health and safety or whistleblowing
- Those who have signed a settlement agreement with their employer
- Workers on fishing boats who are paid out of the profits made by the boat
The Employment Tribunal can also order compensation to be paid. This will be made up of a basic award and a compensatory award. The amount of the basic award depends on factors such as the employee’s age, gross weekly pay and length of service. The compensatory award compensates the employee for the money lost due to losing their job, and is capped at £76,574 or a year’s salary, whichever is lower. These limits do not apply to cases relating to health and safety and whistleblowing.
Constructive unfair dismissal
Even if your employee resigned from your company, they may still be able to make a claim against you if they feel they were forced out. This is known as constructive dismissal.
Examples of situations which may lead to a claim for constructive dismissal include:
- Non-payment or late payment of wages
- Changing working conditions without asking the employee
- Harassment or insulting language
You may be guilty of wrongful dismissal if you do not dismiss an employee in accordance with the employee’s contract of employment. This most commonly occurs when the employee is not given the notice stated in their contract or the procedure laid down in the contract is not followed properly.
Even if no notice period is stated in your employee’s contract, they may still be able to base a claim on their statutory right to notice. Employees are entitled by law to one week’s notice after being employed for a month plus another week for every year worked, up to a maximum of twelve weeks’ notice. Even if not entitled to this, employees should still get ‘reasonable’ notice.
Redundancy is when you let a member of your workforce go because you no longer need anyone to do their job due to changes in the company.
Your employees have certain rights in relation to redundancy. As well as possibly being entitled to redundancy pay, they have the right to reasonable time off to look for a new job or arrange training and to not be unfairly selected for redundancy.
If you select someone for redundancy for any of the following reasons, then you may face a claim for unfair dismissal and/or discrimination:
- marital status
- sexual orientation
- religion or belief
- their membership or non-membership of a trade union
- health and safety activities
- working pattern (e.g. part-time or fixed-term employees)
- maternity leave, birth or pregnancy
- paternity leave, parental or dependants leave
- they’re exercising their statutory rights
- whistleblowing (e.g. making disclosures about their employer’s wrongdoing)
- taking part in lawful industrial action lasting 12 weeks or less
- taking action on health and safety grounds
- doing jury service
- they’re the trustee of a company pension scheme
Common fairways of selecting employees for redundancy include:
- Asking for volunteers
- Using disciplinary records
- Using appraisal scores, skills, qualification and experience
There are some circumstances in which the employer does not have to go through a fair selection process, such as when a whole department of a company is ceasing to exist, or the employee is the sole member of a department.
Your employee will usually be entitled to statutory redundancy pay if they are made redundant after 2 or more years at your company.
|FOR EACH YEAR YOUR EMPLOYEE WAS||THEY WILL RECEIVE|
|Under 22||Half a week’s pay|
|Between 22 and 41||One week’s pay|
|Over 41||One and a half week’s pay|
Certain caps do however apply to redundancy pay. Length of service is capped at 20 years, while the maximum redundancy pay per week is £464. A maximum of £13,500 applies to overall redundancy payments.
However, you will not have to pay this to your employee if you offer to keep them on or you find them suitable alternative employment.
As an employer, you are obliged to give employees a minimum notice period before their redundancy. These are known as statutory redundancy notice periods and depending on the employee’s length of service with your company:
|LENGTH OF SERVICE||STATUTORY REDUNDANCY NOTICE PERIOD|
|Between one and two years||One week|
|Between two and 12 years||One week for each year|
|More than 12 years||12 weeks’ notice|
Payment in lieu of notice
Instead of giving notice of redundancy, it is possible as an employer to dismiss the employee immediately and make a payment to them, providing there is a provision for this in their contract.
Any member of staff that you choose to make redundant will be entitled to a consultation on the matter, where they can discuss the reasons for their selection and any alternatives.
If you are making more than 20 employees redundant then the consultation should take place with a representative, either from the trade union or elected from the workforce.
For the length of the consultation, the following minimums exist:
|NUMBER OF EMPLOYEES||MINIMUM LENGTH OF CONSULTATION PERIOD|
|20-99||30 days before any dismissals take effect|
|Over 100||45 days before any dismissals take effect|
Suitable alternative employment
When making an employee redundant, you can make them an offer of suitable alternative employment. If such a position exists but you do not offer it, then the employee may be able to claim for unfair dismissal.
Whether or not an offer of a new job is deemed suitable depends on a number of factors, including:
- how similar the work is to the current job
- the terms of the job being offered
- the employee’s skills, abilities and circumstances in relation to the job
- the pay (including benefits), status, hours and location
If the employee rejects the offer of suitable alternative employment then they forfeit their right to statutory redundancy pay.
If your employee isn’t sure about the suitability of the work, they have the right to undertake a four-week trial period. If they decide the job is not suitable then their right to redundancy pay will be not be affected.
Time off to look for other work
If an employee who has been made redundant will have been continuously employed by you for at least 2 years by the end of their notice period, then they have the right to take time off to look for a new job or to arrange training to help them to do so. If the employee decides to do this, then you will only have to pay them 40% of their normal weekly wage, regardless of how much time they actually take off.
Upon the dismissal of an employee, that employee and their employer can enter into what is known as a settlement agreement. Through a settlement agreement, the two parties can settle any claims that may be made by the employee after they leave.
By entering into a settlement agreement the employee waives their right to make any claims, such as unfair dismissal.
Settlement agreements can be beneficial for employers as it means that they do not have to worry about any later repercussions of dismissing the employee, such as having to attend an employment tribunal. They can also be much simpler and stress-free to arrange than a claim that has to go through the courts or an Employment Tribunal.
Before making a settlement agreement with an employee, it must be ensured that they have received legal advice from an independent adviser first. This adviser should be a qualified lawyer, a trade union representative or an advice centre representative.
You should acquire a certificate from the adviser confirming that they have given advice to the employee on the terms and effect of the agreement. The advice will also confirm that the adviser has the necessary insurance.
Examples of terms that a settlement agreement may contain include:
- An amount of compensation offered to the employee
- Assurances were given by both the employer and employee
- An indication that all terms have been accepted by the employee and that they will not take legal action in future
- A letter of reference which can be used by the employee in future job applications.
- A ‘non-compete’ clause which places some restriction on the type of jobs the employee is able to apply for in the future
- Payment of tax
- Confidentiality clause – i.e. that the employee cannot disclose some or all of the claims to anybody