Dismissal: what are your rights as an employer?

Whether you have a concern about your employee's conduct or their ability to perform their work duties, you may be considering dismissal.

However it's important to tread carefully. An employee has certain employment rights that, if ignored, could lead to you running into serious legal problems.

In this guide, we look at what dismissal is, the types of unfair dismissal claims your employee could raise, and how you can carry out a fair process if you feel you have no choice but to part ways professionally.

What is a dismissal?

Dismissal is when an employer ends their employee's work contract. This is usually done with notice or pay in lieu of notice.

An employee can be dismissed instantly without pay if they're found guilty of gross misconduct.

There are five potentially 'fair reasons' for dismissal. This includes:

• Conduct: The employee behaving in a way that's considered unacceptable or inappropriate.
• Capability: The employee being unable to work due to long-term ill health or they cannot carry out their duties to the required standard.
• Redundancy: The employee's job role being eliminated because the business is closing or restructuring.
• Statutory breach: The employee cannot do their job legally (perhaps they work in finance but are found to have a criminal conviction for fraud).
• Some other substantial reason (SOSR): For example, a fixed-term contract has come to an end or the employee has been sent to prison.

To be considered fair, you must be able to prove that the reason for the dismissal falls into at least one or more of the above criteria. If your employee has a service period of two years or more, you will also need to be able to show that you followed a full and fair process before reaching the point of dismissal (which we'll get to later).

If you have an issue with your employee's conduct, you should be able to show that you issued verbal and written warnings before the dismissal. Or, if related to capability, you took steps to try to help your employee improve. If you can't show this, a tribunal might not find the dismissal fair.

Dismissal should always be considered a final resort after exhausting all other options (with the exception of gross misconduct).

What are the different types of unlawful dismissal an employee could raise a claim for?

While there are fair reasons for dismissal, there are also unlawful ones which would give your employee grounds to raise a tribunal claim.

Unfair dismissal

Unfair dismissal is when you end someone's employment either for an automatically unfair reason (see below) or when they've worked for you for more than two years and you didn’t follow a full and fair process.

If a tribunal finds you have unfairly dismissed someone, they could make you pay your former employee compensation.

An employee with less than two years of service cannot claim for unfair dismissal - unless the reason for their dismissal is considered 'automatically unfair'.

A dismissal would be considered automatically unfair if the reason was because:

• of 'Whistleblowing'.
• the employee had been part of trade union activities. 
• the employee had asked for parental leave (like maternity leave or adoption leave).
• the employee had requested flexible working.

These unfair reasons would apply even if your employee has less than two years of service.

Wrongful dismissal

You could be guilty of a wrongful dismissal if you dismiss someone and it breaches their employment contract terms. For example, you don't give your employee their entitled notice leave and pay - or at least the statutory minimum.

Again, an employee doesn't need two years of service to make a claim for wrongful dismissal.

Constructive dismissal

Your employee could raise a claim for constructive dismissal if they feel they've been given no choice but to resign from their job.

They might feel this way because of their employer's conduct or work environment. Here are some examples of how someone might claim for constructive dismissal:

• They've been working in an unsafe environment.
• Their employer has been withholding wages or reducing them unfairly.
• Their employer has been ignoring grievances raised during work.
• They've been expected to meet unrealistic deadlines or workloads.
• Their employer is forcing unreasonable changes to their terms and conditions.

While in this case an employee is choosing to resign, it's still considered a constructive dismissal. That's because someone is resigning because they feel they feel they have to resign because of mistreatment, negligence or for a serious reason that's out of their control.

What is a capability dismissal?

You might carry out a capability dismissal if you dismiss an employee because they're unable to carry out their work duties in line with your business expectations.

A capability problem is usually not the fault of the employee. It may be because of the employee's ill health for example, and their performance cannot improve even with support or adjustments.

Note: In some cases long-term ill health can count as a disability and you have a legal duty to support employees with disabilities in work, providing reasonable adjustments as required. If you can't show you provided reasonable adjustments in line with the law and you dismissed your employee, they could raise a claim for disability discrimination.

So while you have the right to dismiss an employee on the grounds of capability, you would need to ensure that you followed a full and fair procedure and can show no alternative options were viable - or effective.

If the issue is related to poor performance and the employee has two or more years of service, then you would be expected to show how you took steps to help your employee improve and address issues early on.

What is a summary dismissal?

A summary dismissal is when you dismiss an employee immediately - without notice or even pay in lieu of notice.

This is used in cases where your employee's behaviour is considered either 'unacceptable' or illegal, like in cases of gross misconduct. You don't have to follow the usual disciplinary stages for this.

After carrying out a thorough disciplinary investigation, you can decide to dismiss your employee with immediate effect if you have strong reason and evidence to believe they are guilty of gross misconduct.

Here are potential reasons for summary dismissal:

• Theft and fraud.
• Workplace violence.
• Serious Health and Safety breaches.

Is an employee entitled to a notice period when they’re being dismissed?

An employee doesn’t lose their notice period rights if you dismiss them, unless the dismissal is because of gross misconduct.

If, after following a fair process and trying alternative options, you still feel you have no choice but to dismiss your employee, you should give them the notice written in their contract. This is known as a ‘contractual notice period’. If the contractual notice is less than the statutory notice period, you should give them the statutory minimum instead.

You may also choose to give your employee pay in lieu of notice (PILON) instead of a notice period.

How can you dismiss someone fairly?

When it comes to dismissal, every employer must be fair and reasonable and act in line with official procedures.

Read the below guides to learn how to handle a full and fair procedure when it comes to conduct or capability issues with an employee:

• What is a disciplinary procedure?
• What are capability procedures and why are they important?

Get expert advice from Peninsula advisers

HR procedures are in place to make sure you're doing everything you can fairly and in line with legal duties.

By taking care to follow all the right steps, you help minimise the risk of facing costly claims in court.

Peninsula offers expert advice on how you can make sure you're taking all the right measures to tackle an employee issue, in line with the law and HR best practices. If you'd like to speak to someone directly, our HR experts are on hand to provide unlimited 24/7 HR employment advice - available 365 days a year.

Want to find out more? Contact us on 0800 029 4382 and book a free consultation with an HR consultant today.