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Guide for Dismissing an Employee, Disciplinary Processes and Disciplinary Procedure

In this guide, you will find answers about dismissing an employee, disciplinary processes and disciplinary procedure, misconduct, and gross misconduct.

This guide and briefing sets out the steps a business should follow when it is 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 the business.

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 five potentially fair reasons for dismissing an employee:

  • Their conduct at work (for example, they have filed a fraudulent expense claim or persistently arrive late at work).
  • Their capability 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). Or because they are too unwell.
  • Their job is redundant (for example, if the workplace is closing). 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.
  • Their continued employment would be illegal (for example, the business has discovered that an employee’s immigration status does not permit them to work).
  • They are being dismissed for what is known as “some other substantial reason”, that is something not falling into one of the above categories but which nevertheless warrants dismissal, such as where the relationship between the parties has broken down.

Dismissing an employee for any reason other than those listed above will be unfair.

Always follow the correct procedure

  • Even if a business has established a potentially fair reason for dismissing an employee, it must still follow the correct procedure. Failure to do so could lead to a claim for unfair dismissal.
  • Generally, an employee must have completed a qualifying period of service before they can bring a claim for unfair dismissal. The qualifying period is two years.
  • However, certain dismissals are deemed to be automatically unfair and an employee is protected as soon as they start work. These include but aren’t limited to dismissals connected with:
  • Family reasons (e.g., pregnancy, maternity, paternity, parental bereavement leave, time off for dependents, etc.);
  • Health and Safety
  • requests for flexible working; or
  • whistleblowing

Check the employee’s contract

It is possible to dismiss an employee fairly but still be in breach of contract if the business has not given them the correct notice under their contract. A 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 an employee from going to work for a competitor).
  • The employee may have a claim for wrongful dismissal in breach of contract (for example, if the business fails to give them their contractual notice period or pay a contractual bonus).

PILON clauses

  • A payment in lieu of notice (PILON) clause is a contractual right that enables a business to pay an employee a lump sum rather than require them to work out their statutory or contractual notice period.
  • Before terminating employment and making a PILON, the business should ensure that the individual’s contract of employment allows for termination in this way. If the contract does not allow for a PILON to be made, then it could be a breach of the contract to do so.
  • If a business decides to make a PILON, it must notify the employee that a PILON is being made to them in exercise of the employer’s contractual right to terminate the employment with immediate effect. Simply making the PILON will not be sufficient to bring the contract to an end.

This employment law briefing just provides an overview of the law in this area.

For a complete understanding of how it may affect your particular circumstances, please contact our Employment team for a free consultation.