Wrongful dismissal claims
Employees with more than two years’ service have protection against unfair dismissal and can file a complaint with the Employment Tribunal if they are dismissed for potentially illegitimate reasons.
Unfair dismissal compensation can be up to a year’s gross pay, so it’s essential for employers to get it right.
When is the reason for dismissal ‘fair’?
There are five potentially ‘fair’ reasons for terminating employment rights:
- Capability e.g. poor performance or ill-health
- Breach of a statutory restriction e.g. losing the right to work in the UK
- Some other substantial reason (SOSR)
If the dismissal is not for one of the five fair reasons, it is unfair. However, the final category operates as a catch-all for potentially fair dismissals that don’t fall into the other categories. There is no legal definition of dismissals that are included in this category, but it would include such matters as a personality clash that’s causing a substantial issue to the business.
Some reasons for dismissal are automatically unfair. The main examples are whistleblowing, pregnancy, and retaliation for asserting minimum pay rights.
What’s the difference between wrongful dismissal and unfair dismissal?
Wrongful dismissal is a claim for breach of contract – it does not matter if the dismissal was fair. An example might be terminating the employee’s contract immediately without observing the notice period.
Damages for wrongful dismissal usually reflect the salary and benefits the employee would have received if the contract had been properly performed. These can be substantial if there’s a long notice period.
How can I avoid unfair dismissal claims?
Even after identifying a potentially fair reason for dismissal, you must act reasonably in treating the reason as sufficient to dismiss. There are a number of elements to the reasonableness test, ranging from the fairness of the procedure you followed to the proportionality of the response. Generally, an employer is expected to follow the Acas Code of Practice on Disciplinary and Grievance Procedures as a minimum standard where fair dismissal procedure is concerned.
You can take steps to avoid an unfair dismissal claim by:
- Getting legal advice at the outset, before you take steps to dismiss an employee
- Give employees an opportunity to improve their performance
- Investigate thoroughly before taking any action
- Follow the ACAS code
- Following your own policies and procedures
- Applying processes and sanctions equally to all workers
- Negotiating a fair termination package and writing it into a settlement agreement
Our employment disputes solicitors advise businesses of all sizes about both individual and collective dismissals. We can help reduce the risk of litigation as well as reputation-tarnishing discrimination claims.