If you have a concern about your employee’s conduct or their ability to perform at work, you may be thinking about addressing it formally.
Sometimes, an employee issue may be so big that you feel the working relationship just can’t continue.
However, it’s important to tread carefully. An employee has certain rights that, if ignored, could lead to you running into serious legal problems.
In this guide, we look at what dismissal is, the different reasons why you might dismiss your employee, the types of claims your employee can raise, and how to handle a fair process.
Let’s start with the official definition. What is dismissal?
To put it simply, a dismissal happens when an employer ends their employee’s work contract. This is usually done with notice or with pay in lieu of notice (PILON).
In some circumstances, you may have the right to dismiss your employee without notice or pay. This may be the case if you find your employee guilty of gross misconduct.
In employment law, a dismissal happens when:
• You terminate your employee’s contract
• You don’t renew your employee’s fixed-term contract
• You dismiss your employee with notice and they resign in their notice period
• Your employee resigns in response to a breach of their contract (this is known as constructive dismissal, which we’ll look at later)
If ever you dismiss an employee, you must be able to show:
• You had a fair reason
• You acted reasonably to reach that conclusion
• You acted consistently (i.e. you haven’t treated your employee differently from someone else who behaved in a similar way)
• You carried out a full and fair investigation beforehand
What is a "fair reason" for dismissal?
Legally speaking, there are five potentially “fair” reasons for dismissal. This includes:
• : The employee behaving in a way that’s considered unacceptable or inappropriate.
• Capability: The employee being unable to carry out their duties to the required standard or due to ill-health.
• Redundancy: The employee’s job role being eliminated because the business is closing or restructuring.
• Statutory breach: The employee being unable to legally carry out their job. (Perhaps they work in finance but turn out 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. You would also need to show that you followed a full and fair process to handle the issue (more on that later).
(It’s important to note that dismissal should be a final resort after exploring all other options. If you were up against a claim, a tribunal would be looking to see if you treated dismissal as the most reasonable conclusion).
What is an “unfair dismissal”?
• Dismissed your employee without a good reason
• Didn’t act reasonably and dismissal was not the most appropriate outcome
• Didn’t follow a formal disciplinary or dismissal process.
If an employee were to raise a tribunal claim for unfair dismissal and you were found to have skipped steps in the procedure, a tribunal could make you pay hefty compensation.
For an employee to raise an unfair dismissal claim, they would need to be able to show:
• They were employed for at least two years
• They raised a claim within three calendar months from the date their employment ended (in cases of summary dismissal, which we'll look at later, it would be when the notice period ends)
Note: the qualifying period doesn’t apply in cases of automatically unfair dismissal or discrimination.
When is a dismissal "automatically unfair"?
This is not an exhaustive list. However, a dismissal is automatically unfair if it’s for any of the following reasons:
• The employee asserted their statutory rights.
• The employee took action on Health & Safety grounds.
• The employee refused to work over 48 hours a week (the maximum limit under the Working Time Regulations).
• The employee had been part of trade union activities.
• The employee had asked for (like maternity leave or adoption leave).
• The employee had requested flexible working.
These unfair reasons would apply even if your employee has worked for you for less than two years.
In some cases, an employee may have reason to think their dismissal is a result of discrimination. If so, they can raise a separate claim for discrimination on top of their existing unfair dismissal claim. Discrimination claims can also be standalone - and a discriminatory dismissal would be automatically unfair.
What is the Acas Code of Practice?
If you have concerns about your employee’s conduct or performance, you should always follow a fair process. To make sure you do, you should manage the issue in line with the Acas Code of Practice on Disciplinary and Grievance Procedures.
The Acas Code says you should:
• Deal with issues promptly
• Carry out necessary investigations to establish facts
• Tell your employee in writing about the problem and invite them to a meeting where they can discuss their side of the story
• Remind your employee of their statutory right to bring someone with them to any grievance or disciplinary meetings. (This might be a colleague or trade union representative)
• Put your decision in writing and allow your employee the opportunity to appeal
How can you show you followed a full and fair process?
A full and fair process is key in any situation.
If conduct is the issue, you should be able to show that you gave your employee verbal and written warnings.
If capability is the issue, you should be able to show that you took steps to try to help your employee improve.
If an employee were to raise a claim, as well checking to see if you followed the Code, a tribunal would look at:
• Your employee’s length of service
• How reasonable and thorough your investigation was
• How much warning you gave your employee and if they had chances to improve
• How they were treated compared to other employees
• Whether you considered alternatives to dismissal
On what grounds could you dismiss an employee?
You may feel you have no choice but to carry out a dismissal in certain circumstances.
As long as you followed all of the appropriate steps, you may choose to dismiss an employee in the following situations:
Conduct dismissal
You may choose to dismiss someone for misconduct if their behaviour in work causes damage to the working relationship.
When an employee’s actions violate the policies and procedures attached to their job role or your company, this is misconduct.
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.
Capability falls into three categories. This includes qualifications relevant to the position, poor performance or medical illness that prevents an employee from performing their duties.
A capability problem may not be the fault of the employee at all. In a case of ill health, for example, their performance may not be able to improve even with support or adjustments.
Note: In some cases long-term ill health can count as a disability. As you have a legal duty to support employees with disabilities in work, you should make reasonable adjustments as required. If you can’t show you made changes to support your employee in line with the law and dismissed them, they could raise a claim for disability discrimination.
Summary dismissal
A is when you dismiss an employee without notice or even pay in lieu of notice.
You might do this in really severe cases of misconduct, like in cases of . You don’t have to have given prior warnings to dismiss someone on this basis.
An example of gross misconduct might involve:
• Serious Health and Safety breaches.
After carrying out a thorough investigation and disciplinary hearing, you can decide to dismiss your employee with immediate effect.
However, even in cases of gross misconduct, you do still need to consider whether dismissal is the most appropriate course of action.
Redundancy dismissal
Let’s say you no longer have a need for a specific job role. Alternatively, you’ve decided to reduce a job role for a business reason. You may choose to dismiss someone on grounds of redundancy.
If you make somebody redundant, this still counts as a dismissal.
So, you would still need to follow a fair procedure. A person who has been made redundant would still have a right to raise a claim for unfair dismissal if they feel they haven’t been treated fairly.
It's very important to follow a fair redundancy process, which involves:
• Considering alternative approaches
• Having a good business case
• Consulting with affected staff
• Providing the right amount of notice and redundancy pay
What is a wrongful dismissal?
You could be guilty of a if you dismiss someone and it breaches the terms in their contract. For example, you don’t give your employee their entitled notice leave and pay - or at least the statutory minimum.
Like in cases of automatically unfair dismissals, an employee doesn’t need two years of service to make a claim for wrongful dismissal.
What is a constructive dismissal?
Your employee could raise a claim for if they feel they’ve been given no choice but to from their job.
They might feel this way because of their employer’s conduct or work environment.
Again, while this not an exhaustive list, an employee may claim constructive dismissal if they resign because of any of the following reasons:
• They’ve been working in an unsafe environment.
• Their employer has been or reducing them unfairly.
• Their employer has been ignoring raised during work.
• They’ve been expected to meet unrealistic deadlines or workloads.
• Their employer is forcing unreasonable changes to their terms and conditions.
In a case of constructive dismissal, an employee resigns because they feel they feel they have to. They might cite the reason as mistreatment or negligence.
If an employee can establish that they resigned directly as a result of a breach of contract or a breach of trust and confidence, this can amount to a constructive dismissal.
If an employee also feels they’ve been pressured into resigning, they can also raise a constructive dismissal claim.
If you dismiss an employee, do you have to give notice?
An employee doesn’t lose their notice period rights if you dismiss them. That’s unless the dismissal is because of gross misconduct.
If you dismiss your employee, you should give them at least 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. You’re able to do this as long as you’ve included a clause in their contract that says you can.
How can you be sure you’ve taken all the right steps to act fairly?
When handling conduct or capability issues, you must always be fair and act in line with official procedures.
To learn more about how to manage a full and fair procedure, you may find the below guides useful:
• What is a disciplinary procedure?
• What are capability procedures and why are they important?
How is dismissal protection changing under the Employment Rights Bill?
On 10th October 2024, the government published the Employment Rights Bill. This set out major proposed reforms to employment laws.
One of these promises was to give employees protection against dismissal from the start of their employment (instead of two years in).
Under the Bill, you will be able to dismiss an employee if the reasons for that dismissal fall under one of the five potentially fair reasons and this will apply from the start of employment. There will also be a statutory probation period for new starters.
New staff will be subject to a “lighter-touch” process during their probation period (except in cases of redundancy).
Once these changes land, it will be important to make sure your disciplinary and capability policies are up to date. You’ll need to make sure your probation process is watertight too.
Got an issue with your employee and not sure how to address it? Get expert advice from Peninsula advisers
HR procedures exist to make sure you’re doing right by your staff and your business.
By taking care to follow all the right steps, you help minimise the risk of facing costly claims in court.
Got an issue with your employee and not sure how to address it?
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