Employers cannot dismiss employees without having regard to the law. Particular precautions apply where an employee is redundant, or believes they have been discriminated against on grounds of race, sex or disability.
But any dismissal needs to be handled carefully, even in cases where employees are apparently caught red-handed committing a serious offence.
There have been significant developments to the law relating to unfair dismissal over the past 18 months, with the implementation of the Employment Relations Act and the Unfair Dismissal and Statement of Reasons for Dismissal Order. These have increased the maximum compensatory award to £51,700 and reduced the qualifying period – from two years to one year – for those wanting to bring a claim against their employer.
If the employer is guilty, the costs can be crippling, not just in terms of compensation but also from the negative publicity. After all, who would want to work for an organisation that is known for treating its staff badly? In the current tight labour market, the worst move your business could make is to hit the headlines for the wrong reasons.
More bad news for employers is that the number of complaints to tribunals leapt by 32 per cent (164,525) between 1999 and 2000.
Sue Nickson, a partner at law firm Hammond Suddards Edge and author of the CIPD’s guide on dismissal, adds: ‘In the vast majority of employment tribunal cases, compensation is the remedy adopted by the tribunal. If employers want to avoid this expense they need to ensure they are aware of changes to the law and of all possible preventative measures.’
The law surrounding unfair dismissal is basically underpinned by good management practice. In September 2000, ACAS updated its code of practice on disciplinary procedure which exists to help employers develop policies to deal fairly with disciplinary issues. By following this code, employers avoid the risk of becoming embroiled in costly legal battles and employees can avoid being dismissed unfairly.
The Employment Rights Act 1996 lists three scenarios where an employee may face dismissal.
These are when the employee’s contract is terminated by the employer, with or without notice; the employee works under a fixed contract and this term expires without renewal; or the employee terminates their contract due to the employer’s conduct – constructive dismissal. In each case, a dismissal may be either fair or unfair.
There are a number of circumstances where dismissal can be justified or said to be not unfair. These include: misconduct; inability to do the job; redundancy; some other substantial reason – for example imprisonment or a statutory requirement – such as a chauffeur who has been banned from driving and there is no alternative work on offer. Even though the employer in such cases might have good reason to ‘dismiss’, there are still correct procedures that need to be followed if they wish to avoid being the next organisation with their head above the parapet.
Take for example the case of the employee who is dismissed because of an inability to do the job. Nickson says: ‘The key is that the employer shows that poor performance is the ‘only’ reason for dismissal. They must be able to show that they have acted reasonably, so evidence of incompetence will be required which might include the opinions of supervisors or customers.’
The employer needs to properly address the problem, giving the employee the opportunity to respond to the allegations of poor performance. An appraisal and investigation of performance should be conducted, giving the employee a chance to improve, reaching the standard of performance required.
Nickson adds: ‘Warning the employee of the consequences of not improving is crucial. A dismissal where the employee is not warned is likely to be unfair. The purpose is to give them a chance to improve and for the manager to address problems to do with training, poor management or a genuine inability to do the job.’
Mike Emmott, the CIPD’s adviser on employee relations says: ‘Both parties should agree targets and set timescales so the employee’s performance can be measured for improvements. If the employee’s performance still fails to improve, the employer should consider if there are alternative positions the employee could take before making the decision to dismiss.’
Dismissal automatically becomes unfair when an individual is dismissed for reasons relating to a number of scenarios such as pregnancy, maternity leave, parental leave or time off for dependents; for refusing to forgo rights under the working time regulations or for refusing to work on a Sunday.
Following the publication of the DTI’s recent consultation on reforming employment tribunals, Emmott adds: ‘Where an employee is not happy with the way in which he or she is being treated by the employer, the issue should so far as possible be resolved in the workplace. We welcome the government’s recognition that it is generally preferable to deal with issues on a voluntary basis rather than have recourse to legal enforcement.
It cannot be right that in two-thirds of all complaints to tribunals, the first an employer knows about it is when the tribunal application is lodged.’
The substantial increase in complaints to ACAS, including claims for unfair dismissal, confirms the importance of following the ACAS Code.
By taking time to put such measures in place, employers help to reduce the risk of any brushes with the law and the consequences of damaging publicity.
Good people management practices make business sense and prevention is far better than cure.
- Imogen Daniels is an adviser on development and resourcing at the Chartered Institute of Personnel and Development.