Dismissing an Employee

This checklist sets out the steps your business should follow when you are considering dismissing an employee.

Why is it important to follow the law when dismissing an employee?

Dismissing an employee for a reason other than one allowed by law, without following the correct procedure or giving adequate notice, may lead to a claim for unfair or wrongful dismissal against your business. Compensation for a successful claim can potentially be substantial. Regardless of whether a claim succeeds the costs of defending it (in terms of management time and legal costs) may be significant and are not usually recoverable.

Establish whether there are grounds for dismissal

There are several potentially fair reasons for dismissing an employee:

  • The way in which they have conducted themselves at work (for example, they have filed a fraudulent expenses claim or persistently arrive late at work).
  • They are unable to carry out their job because they lack the necessary skills required (for example, a sales manager has consistently failed to meet reasonable sales targets despite receiving additional support and training).
  • They are on long-term sick leave and cannot return to their job.
  • Their job is redundant (for example, if your business is declining or your workplace is facing closure). Do not use redundancy as an easy alternative to dismissing an employee for poor performance. The “redundant” employee could make a claim for unfair dismissal.
  • Continuing to employ them would be illegal (for example, you have discovered that your employee’s immigration status does not permit them to work).

Be very careful when establishing the grounds for dismissal as using any other reasons could result in a claim for unfair dismissal.

Always follow the correct procedure

  • Even if your business has established a potentially fair reason for dismissing an employee, you still must follow the correct procedure. Failure to do so could lead to a claim for unfair dismissal.
  • Generally, an employee must have been employed for one year before they can bring a claim against your business for unfair dismissal.
  • However, certain dismissals are deemed to be automatically unfair and an employee is protected as soon as they start work. These include dismissals connected with:
    • pregnancy
    • parental leave
    • requests for flexible working; or
    • whistleblowing

Check your employee’s contract

It is possible to dismiss an employee fairly but still be in breach of contract if you have not given them the correct notice under their contract. Your business does not want to take any action that could breach an employee’s contract because:

  • It may lose valuable protections in the contract such as post-employment restrictions (for example, stopping your employee going to work for a competitor).
  • Your employee may have a claim for wrongful dismissal in breach of contract (for example, if your business fails to give them their contractual notice period or pay a contractual bonus).

Notice of termination

  • A notice of termination can rarely be withdrawn. An employee will be able to take the notice at face value unless your business can show that it did not intend to terminate the contract.
  • In very limited circumstances (typically where notice is given in the heat of the moment), the recipient of the notice may be entitled not to take what is stated at face value.

More information

If you have any questions about the content of this checklist, please contact Philippa Spratley at philippa@lawdepartment.co.uk.