Unfair Dismissal – the Employer’s perspective

Unfair Dismissal – the Employer’s perspective

Introduction

Part two of our article on the basics of Unfair Dismissal (see Part one here) looks at unfair dismissal advice for employers. And we’re going to put this out there right at the start –

Fairly dismissing employees is easy.

There, we’ve said it. Don’t believe us? Well, read on and we’ll explain why.

Employment Tribunals do not exist to make it hard for people to run their businesses. On the contrary, it’s very well established that Tribunals have no right to tell businesses what to do (or not do). And, save in exceptional circumstances, they have no power whatsoever to go behind commercial decisions. And that’s the case, even if those decisions are exceptionally bad decisions.

Tribunals recognise that running a business is not an exact science. This is, after all, why we have the concept of limited liability companies and partnerships. Sometimes business goes wrong and entrepreneurial spirit should not be discouraged by worrying too much about the consequences.

So why do so many employers lose unfair dismissal claims?

There are three main reasons:

(1) They don’t get the quality advice they need to make it easy when the situation is at a formative stage. The employer tries to deal with it themselves and makes a (usually) basic error, more often in procedure than substance;

(2) The case is one of those quite rare ones where either the fairness or otherwise of the dismissal is genuinely quite finely-balanced, or it wasn’t but the Tribunal makes a rogue decision;

(3) The real reason for the dismissal is an unlawful one.

This last point – the unlawfulness – is the one area where the Tribunal does get to tell businesses what to do, or at least what not to do. You can make your own commercial decisions, even plain silly ones, but what you can’t do is make those decisions for prohibited reasons.

The good news is that these prohibited reasons are actually largely a matter of common-sense. In other words, even if you don’t know exactly what they are, most right-minded people would instinctively know them when they saw them. A bit like elephants… Even better than that, though, the law gives employers five very broad reasons which will found a fair dismissal. If your reason is one of those potentially-fair or ‘substantial’ reasons, then you are half way there.

How much service does the employee have?

Before we come on these five magic solutions to all of your staffing problems, it is important to restate the issue regarding length of service. Generally speaking, an employee must have two years’ continuous employment (employment without any breaks in service) before acquiring the right not to be unfairly dismissed. 1 year and 364 days isn’t enough. They need 2 years.

So, the first question an employer will want to ask themselves is how much continuous service does the employee in question have? If the answer is less than 2 years, then the employer may be able to dismiss with impunity. There is just one further point to bear in mind: there are a number of reasons for dismissal which are regarded as sufficiently improper that the law actually ignores this 2-year rule. So, for example, if the principal real reason for the dismissal is connected to one of the following, the dismissal might be unfair regardless of how much service the employee has:

• whistleblowing;
• trade union membership;
• being an employee representative or pension trustee;
• jury service;
• raising health and safety concerns;
• asserting rights under the Working Time Regulations;
• asserting rights under the National Minimum Wage legislation;
• exercise of maternity or other family leave rights; and
• exercise of other statutory rights.

As long as none of these apply and the employee has less than 2 years’ continuous employment, the unfair dismissal legislation does not apply. And therefore the employee cannot bring an unfair dismissal claim. The employer can literally call the employee in with no warning, hand them their notice pay and show them the door.

A word of caution though: they may be able to bring other claims. The most obvious examples are that of discrimination or harassment. If you dismiss an (under 2 years’ service) employee because of the colour of their skin, for example, they won’t be able to sue you for unfair dismissal. They may well, however, be able to sue you for discrimination – and quite right too.

For this reason, a sound knowledge of the five ‘potentially fair’ reasons – which will, by default, guide you away from inappropriate reasons will stand you in good stead, even if only as a sense-check for a decision you are contemplating.

The five ‘substantial’ reasons

For those employees with 2 years’ continuous service or more, the employer has to work a little harder. They have to jump through a couple more hoops. First, the principal reason has to be one of five potentially-fair or ‘substantial’ reasons. Secondly, the employer has to act reasonably in relying upon that particular reason.

The five reasons are:

Conduct: the employee has misbehaved in some way. They have broken their contract or a workplace rule or done something else which the employer considers to be inappropriate – this can be a series of issues or one really serious issue known as ‘Gross Misconduct’;

Capability: the employee is not capable of doing their job – for example, because their performance is poor or their health is preventing them from working often or satisfactorily enough;

Statutory prohibition: there’s a legal reason why the employer can’t keep them on. Perhaps they’ve lost the right to work in the UK or they are prohibited from holding a particular role;

Redundancy: there has been a cessation or reduction in the need for employees to do work of a particular kind, or the workplace has closed down;

Some other substantial reason (often abbreviated to “SOSR”) – the employer has another really good business reason not covered above. A good example would be that the employee won’t agree to new contractual terms which the employer really needs to put in place.

It will immediately be apparent that this is a broad list. A really broad list. What’s more, the inclusion of the ‘catch-all’ SOSR means that the list of good reasons for dismissal is never actually closed. All you have to do is identify a sound business reason. SOSR has been held, over the years, as apt to solve a multitude of problems – even a genuine but mistaken reliance upon one of the other reasons can be fair for SOSR!

As we said in Part I, there are some reasons which are expressly stated by the law to be “automatically unfair” but the reality is, this list gives any right-minded employer ample scope to deal with the problem of a member of staff who is no longer adding value.

How do you prove the reason?

In our experience, employers get bogged-down far too often with concerns about ‘proof’ and ‘evidence’, usually because they don’t really understand either. Our practice is to cut through this. In reality, if an employer has a sense or an instinct that they need to dismiss an employee, we will be able to help them work out what lies behind this. Very occasionally, it will be an improper consideration, in which case we will say so and approach the matter in a different way. In the vast majority of cases, though, the employer’s ‘feeling’ or the ‘personality-clash’ they can’t quite explain will come down to an irritation or frustration at the employee, at a fundamental level, not rendering good service or not adding good value.

How do we prove that? Well, one person’s verbal account about their feelings towards an employee is perfectly good and valid evidence. If that person is a credible witness, it can be very powerful evidence. And if we have nothing more, we can simply work with that. We’ve done it before – a lot – and we’ll do it again. But in the vast majority of cases, there are all sorts of sources of other evidence we can call upon to strengthen the case. Once we know where we are going, getting there is rarely a problem.

Was the dismissal fair ?

Once we have proved a substantial reason, all that remains is to ensure that the employer goes about dismissing for that reason in a reasonable way. This is all that the law requires – reasonableness. Reasonableness is assessed according to what lawyers call the “band of reasonable responses” test. In other words, the Tribunal will ask itself whether the thing in question – the evidence; the weight attached to the evidence; the various procedural steps etc. – was handled in a way which a reasonable employer might handle it. It doesn’t matter if the Tribunal would have done differently. As long as the employer’s action or decision was within the range of reasonable responses, the Tribunal will not interfere with it.

By this stage, it really is a lot like baking a cake. Each reason has a ‘recipe’. If you know the ingredients, the order and quantities in which to use them and how long to cook them for, you should end up with the same delicious cake each time you go into the kitchen. Of course, the reverse is also true – use the wrong quantity of the wrong ingredients in the wrong order and you get a mess. And possibly food-poisoning.

Conclusion

In summary, there really is no excuse to unfairly dismiss an employee. Ever. Between us, we have been advising employers on how to dismiss employees for decades. And we can honestly say that we have never had a dismissal which we have advised upon successfully challenged. The important thing is to get quality advice at the start.

So, avoid half-baked ideas. Choose a perfect cup cake every time.

Perfect cup cakes. Mmmm…that’s the Paladin way.