Alan Price, head of employment law at Peninsula HR, explains how small business owners can ensure that claims of unfair dismissal are not brought against them by former staff members.
Although unfair dismissal laws have been around since the introduction of the Employment Rights Act in 1996, claims for being unfairly dismissed continue to be one of the most commonly brought claims at employment tribunal. The law, and procedure required, is tricky and one wrong move could leave employers open to liability.
Employees who gain two years’ service with their employer have the right to not be unfairly dismissed, taking in to account the statutory notice period.
To protect themselves against an unfair dismissal claim, employers need to show that their reason for dismissal was one of the potentially fair reasons contained in the legislation, they followed a fair process and a dismissal was fair and reasonable in all the circumstances.
There are five potentially fair reasons for which an employer can dismiss an employee.
- Continued employment would contravene a statute
- Some other substantial reason (SOSR)
SOSR is often seen as a catch all category but the reason has to be substantial enough to justify a dismissal, for example, where there is a breach of the implied term of mutual trust and confidence meaning the employment contract can no longer continue.
Employers need to show the reason for dismissal fell in to one of these five reasons or the dismissal will be deemed unfair.
Even where an employer dismisses for one of the five outlined reasons, the dismissal can still be found unfair if the employer has not followed a fair procedure. This may require, in cases of redundancy, following a fair selection and consultation process but the employer also needs to follow the Acas Code of Practice on Disciplinary and Grievance Procedures.
As a minimum, this requires the employer to carry out a reasonable investigation, inform the employee of the hearing and provide them with evidence in advance of the hearing, hold a formal hearing where the employee has the right to be accompanied and allow an appeal against the decision.
Any additional rights contained in the company’s disciplinary procedure, such as extending the people who can accompany the employee, also need to be granted in each case. Failing to follow the Acas procedure could lead to any unfair dismissal compensation award at tribunal being increased by 25 per cent.
A tribunal can still determine whether the dismissal was unfair because no reasonable employer would have dismissed the employee in the same circumstances.
To avoid this finding, employers need to show that they have taken in to account all the relevant circumstances when making their decision, including mitigating information such as length of service, previous disciplinary record and any other extenuating circumstances.
Although short service employees, those with less than two years’ service, don’t have the right to claim for unfair dismissal, employers should be aware that they could claim automatic unfair dismissal from day one.
This applies where the dismissal is for certain protected circumstances such as whistleblowing, asserting a statutory right or for participating in trade union activities. Any dismissal for these protected reasons will be automatically unfair, regardless of the fairness of the procedure followed.
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Alan Price is head of employment law and HR at Peninsula HR
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