Under common or contractual law an employer can dismiss an employee at any
time, although a period of notice must normally be given (save in cases of
gross misconduct) or a payment in lieu of notice is made. However, employees
with sufficient continuity of service*, have the right not to be unfairly dismissed.
In such cases a dismissal will only be lawful if it is for a fair reason and
the employer has acted reasonably in all the circumstances which usually involves
following certain statutorily laid down procedures. The following examines
the levels of notice which must be given and the reasons for dismissal which
are legally considered to be fair.
*the existing requirement is that an employee must have at least one years’ continuous
employment. However, there are circumstances such as dismissal for a Trade
Union activity, a Health and Safety reason, or dismissal on the grounds of
pregnancy, etc. where the pre-requisite one years’ continuous employment
is not required.
What notice must an employer give?
The minimum levels of notice which an employer must normally
give to an employee are laid down in the Employment Rights Act 1996 and depend
upon the length
of time the employee has been continuously employed, as follows:
- Less than 4
weeks continuous employment - 24 hoursLess than 4
weeks continuous employment - 24 hours’
- 4 weeks to 2 years
continuous employment - 1 week’s notice
- 2 years to 12 years continuous
employment - 1 week’s notice for each
complete year of continuous employment
- more than 12 years continuous employment
- 12 week’s notice
If the employee’s contract provides for a longer period of notice than
the above statutory minimum periods of notice, the longer contractual period
of notice will apply. The contract may also provide that a payment may be made
to the employee in lieu of notice.
However, if an employee is guilty of serious or gross misconduct the employer
may be justified in instantly dismissing the employee without any period of
notice at all.
What payment is an employee entitled to during their notice period?
An employee is entitled to be paid at their normal rate of pay. They are also
entitled to receive any contractual benefits (express or implied) which they
ordinarily enjoy such as use of a company car, mobile phone, etc. This applies
regardless of whether the employee is away from work on sick leave, holiday
or maternity leave during the notice period, or if they are willing to work
but no work is provided. If a proportion of their pay is made up of commission
then issues will arise if they are not permitted to work during their notice
period (see bonus and commission section).
When will a dismissal be fair?
A fair dismissal involves two criteria both of which must be satisfied.
Firstly, the dismissal must be for one of the following reasons:
- the employee
is unable or unqualified to do the job in hand (e.g. long term sickness absence)
- the employee’s conduct is unsatisfactory (e.g. poor attendance)
- the employee is legally prevented from continuing to carry out their job
(e.g. a van driver who loses their licence)
- redundancy (e.g. due to closure
- some other substantial reason (e.g. a refusal to agree to a
necessary and reasonable
change in terms and conditions of employment)
Secondly, the employer must
act reasonably in all the circumstances in deciding to dismiss the employee.
There are now certain statutory procedures
disciplinary matters and redundancy which must be followed or the dismissal
will be automatically unfair and will result in higher awards of compensation.
All dismissals usually involves following certain procedures and may involve
consideration by the employer of alternatives to dismissal (e.g. transfer
to a different job or different duties in cases of poor performance or redundancy).
Each case will depend on its own facts although matters such as the size
resources of the employer will be taken into account.
Can a dismissal be automatically
It is automatically
unfair to dismiss an employee, regardless of their length of service, for
any of the following reasons:
- being (or not being) a member of a trade union or taking part in trade
- being pregnant or taking maternity leave
- taking certain types of action
on health and safety grounds
- seeking to enforce another statutory employment
right (e.g. asking for a written statement of employment rights)
(in certain circumstances) to do shop or betting work on a Sunday
connected with the transfer of an undertaking from one employer to another
(unless justified on economic, technical or organisational reasons
involving a change in the workforce)
- acting (or volunteering to act) as
a consultation representative for other employees in a redundancy exercise
or business transfer
A dismissal will also
be automatically unfair in the case of an employee who has at least one year’s
continuous employment if the employer has failed to follow the statutory procedures
for disciplinary matters or redundancy situations.
In such cases the normal award of compensation to the employee by a Tribunal
can be increased by as much as 50%.
What are the penalties involved for an unfair
If an Employment Tribunal
decides that a dismissal is unfair it may order the employer to re-employ the
employee or, more usually, to pay the employee
compensation. The amount of compensation consists of a basic award calculated
in a similar manner to a redundancy payment, and a compensatory award based
on the employee’s loss, which can be well in excess of £50,000.
Employers should always take advice prior to dismissing
an employee as the procedures involved are complex, even where the reasons
the dismissal e.g.
redundancy or misconduct, appear clear cut. Failure to do so may not only
mean that the dismissal is unfair, but may result in a higher award of compensation
Equally, employees should always seek advice when dismissed
as there may be matters relating to the procedure followed by the employer
relation to that
dismissal which would make it unfair. This is especially so in cases of dismissals
for redundancy, even where the employer has gone into administration.