As an employer, you’ll have to deal with contract terminations from time to time.
It’s often a difficult and stressful situation to deal with. But you must also be aware of the correct procedures to follow. If you don’t, an employee can make an employment tribunal claim.
You can also read this guide for details on how to establish practices that will avoid this issue.
What is unfair dismissal?
It’s an employment contract termination a business undertakes—without good reason.
One of the most important things for you as an employer to be aware of is the danger of unfair dismissal.
Unfair dismissal in the UK law dictates that employees have the statutory right not to be unfairly dismissed.
In short, this means you must act reasonably when deciding whether to terminate the contract of employment.
There are five potentially fair reasons for dismissing an employee (under unfair dismissal law). You’ll need to demonstrate the dismissal was a result of one of these reasons:
- Conduct: Where their behaviour is unacceptable.
- Capability: Where they do not have the right skills or aptitude in which to conduct their role.
- Statutory ban: Where continuing to employ them in their specific role would be in breach of the law.
- Redundancy: Where the employee’s role is no longer required by the company.
- Some other substantial reason: Situations where the dismissal does not fall into the above categories, such as reputational damage associated with keeping the employee on.
Grounds for unfair dismissal can also arise because of faults in the procedure, which led up to the dismissal as a whole.
This is crucial to remember as many unfair dismissal cases succeed on these grounds even when it could have otherwise been reasonable to dismiss an individual in the circumstances.
So, it’s important that you maintain and follow clear and lawful procedures before making any decision to dismiss.
Some unfair dismissal examples include dismissing somebody for their behaviour without first implementing a disciplinary procedure, or making an individual redundant but hiring someone else to undertake a similar role.
When considering redundancies, redundancy advice is highly advised.
Ultimately, what is reasonable for a tribunal will depend on the circumstances, the size and resources of the employer—and in regard to the merits of the case.
How Peninsula Business Services can help
If your business needs assistance with terminating employment contracts, we can talk you through the process.
It’s important to treat your employees fairly—as well as to respect current employment laws.
You can contact us for guidance on any HR or employment law issues. Or request a call back for a time that suits you.
Ultimately, it’s important to remember you must handle employee relations with care. And we’re here to help your business avoid common contractual breaches and errors.
Who can claim unfair dismissal?
Only individuals who are employees have the right not to be unfairly dismissed.
But can a contractor claim an unfair dismissal? The short answer is no. Generally, claims for unfair dismissal can only be brought by an individual who has the relevant unfair dismissal qualifying period.
This means situations of unfair dismissal under two years of service, employees would not be able to pursue the matter in a tribunal.
However, it's important to remember a dismissal claim may be automatically unfair dismissal in certain circumstances, which does not require any length of service.
Furthermore, employees not able to claim unfair dismissal could still seek to bring a separate breach of contract claim if the procedure followed to dismiss them did not stick to the terms in their contract.
Unfair dismissal compensation
You may wonder if, when considering tribunal awards, there is an unfair dismissal cap.
The maximum award for unfair dismissal is set by the government, with rates increasing annually, and is made up of a basic and compensatory award.
As of the time of writing, the basic award for unfair dismissal is a maximum of £15,750. The compensatory award is set at a maximum of £86,444, or 52 weeks of pay, whichever figure is lower.
At the outcome of a tribunal hearing, the tribunal may issue an unfair dismissal reinstatement order.
This will require you to reengage the employee on the same terms and conditions as before with no loss of continuity of employment.
However, as the relationship between yourselves and the employee would likely have broken down by this point, such orders are rare.
Need our help?
We can help with your employee relations and contract terminations. Get in touch for immediate assistance: 0800 028 2420.