10 common pitfalls for employers when dismissing employees
By Tamara Barbeary & Sunny Rafaeli
Dismissing staff can be a challenging process for employers, both procedurally and emotionally. If the employer does not carry out the dismissal process correctly, this can be costly and may result in employment tribunal claims for discrimination, unfair dismissal and wrongful dismissal.
Many employers tend to make the same mistakes during the dismissal process. We have identified 10 of the most common mistakes that employers make and should avoid making:
1. Dismissing an employee one day short of their two-year work anniversary and breathing a sigh of relief
Employers need to be aware that in certain circumstances employees are able to tack on the statutory minimum notice to their length of service, thus getting them over the line to the two years’ service requirement for an ordinary unfair dismissal claim. Therefore, particular care should be taken with regard to the date of the dismissal where it is close to the employee’s two-year work anniversary and employers should have regard to any periods of contractual or statutory notice that may apply.
2. Assuming there are no consequences when dismissing an employee with under 2 years’ service
In certain circumstances, employees do not need the qualifying period of two years to bring an unfair dismissal claim. The requirement does not apply to nearly all cases of dismissals for one of the automatically unfair reasons in the Employment Rights Act 1996, if the dismissal (or the process of dismissal) is discriminatory under the Equality Act 2010, as well as a few other exceptions.
3. Breaching the contract of employment when dismissing the employee
Employers need to be careful not to dismiss an employee in a manner that breaches the contract of employment, for example by failing to give adequate notice, not paying other contractual entitlements, or terminating a fixed-term contract early. This is likely to lose the employer the benefit of any contractual rights, such as post-employment restrictions, preventing the employee working for a competitor or poaching the employer’s customers or staff. It would also result in the employee having a claim for wrongful dismissal.
4. Not identifying which of the five potentially fair reasons the employer is relying on to dismiss or using the wrong one
In order to carry out a fair dismissal, employers need to ensure, amongst other things, that they have identified one or more potentially fair reasons for the dismissal (conduct, capability or qualifications, redundancy, illegality or some other substantial reason) and that they have acted reasonably in treating that reason as sufficient to dismiss.
Employers often either fail to identify the potentially fair reason or identify (or use) the wrong reason in the circumstances. Each potentially fair reason for dismissal dictates which procedures the employer is advised to follow in order to carry out a fair dismissal. It would also be difficult for an employer to show it had acted reasonably. Therefore, if employers do not identify the correct potentially fair reason, they may be exposed to a claim for unfair dismissal.
5. Procrastinating in dealing with performance issues and not documenting them
Even where an employee’s poor performance may give rise to a potentially fair dismissal, employers often fail to deal with this early on, and do not put in place improvement plans or keep an adequate paper trail, thus making it difficult to prove the dismissal was fair. Employees are also much more likely to believe that the real reason for dismissal is not their performance where the employer has never previously raised the issue.
6. Not considering reasonable adjustments
If the employee is disabled for the purposes of the Equality Act 2010, there is a possibility that capability issues, under-performance or misconduct is connected in some way to their disability or to the disability of someone they are caring for. In these situations, reasonable adjustments should be considered before deciding to dismiss or this could give rise to a disability discrimination claim.
7. Not following a fair procedure
Employers may have a potentially fair reason to dismiss an employee, but their failure to follow a fair procedure before deciding whether to dismiss will usually render an otherwise fair dismissal unfair. This includes the employer following its own policies, any contractual or statutory obligations, and in relation to conduct and performance dismissals, following the Acas Code. Ultimately, to avoid a finding of unfair dismissal, an employer needs to show that it acted reasonably in all of the circumstances of the case, both in treating the reason as sufficient to dismiss and following a fair procedure.
8. Having a protected conversation to offer an exit package when the conversation is not actually protected
Employers often mistakenly think that having a “protected conversation” (off the record) with an employee when offering an exit package will always protect the employer from it being admissible in any future proceedings as evidence. Many employers fail to consider that although protected conversations can be used when there is no genuine dispute at the time, they can only be used and protect the employer in ordinary unfair dismissal cases, not dismissals that are automatically unfair or where there is discrimination. Furthermore, there must not be any ‘improper behaviour’ during the process, such as putting undue pressure on the employee in the form of bullying or intimidation.
Similarly, employers are often not aware that the more general “Without Prejudice” rule, which is broader in scope, only applies where there is an existing dispute between the parties.
9. The “Jump before you are pushed” mistake
Employers who are considering dismissing an employee may be tempted to invite them to “jump to avoid being pushed”. This may be as an act of kindness towards the employee or to save the employer having to go through a fair capability or disciplinary process. However, if the employee is left to feel that they had no choice but to resign, it could result in a claim for constructive unfair dismissal due to a breach of trust and confidence. In these circumstances, it would be more difficult for the employer to show that a fair process had been followed. While this approach may pay off, employers need to act with extreme care and seek advice where appropriate.
10. Not being clear on the effective date of termination (EDT)
Employers are often unclear on the employee’s EDT. The EDT will differ depending on whether employment has been terminated with or without notice and whether the employee is on a fixed term contract.
Establishing the EDT is important for determining, amongst other things, whether an employee is in time to bring an employment tribunal claim and to calculate certain compensation awards and what contractual and statutory entitlements are due to the employee.
Ultimately, when conducting dismissals, employers need to consider the specific circumstances of each case. Employers are advised to seek professional advice where necessary.
DISCLAIMER: The checklist and the content of this article has been prepared for informational purposes only. The content does not constitute legal advice, nor does it give rise to a solicitor/client relationship. Specialist legal advice should be taken in relation to specific circumstances.
If you do require specific assistance in relation to dismissing an employee or any other employment related matters, please contact our specialist team here at Lennons.