Unfair Dismissal
Background
It was widely believed to be unsatisfactory that an employee could be sacked for no reason whatever. The International Labour Organisation Recommendation 119 on Termination of Employment (1964) deprecated this practice. The Donovan Commission on trade unions and industrial relations (1960s) recommended an unfair dismissal law which was first introduced in the Industrial Relations Act 1971 and now may be found in the ERA 1996 Part X.
Qualifying Conditions
Only employees have this right.
ERA s. 108(1) – must have two years continuous employment.
No qualifying period if it is automatic unfair dismissal, e.g. discrimination.
Excepted occupations, e.g. police, Crown employees where the relevant minister has granted an exemption certificate on national security grounds.
fixed term contract
The employee must prove that he or she has been dismissed. Words spoken in anger may be ambiguous, e.g. get in your car and go home. Where a fixed term contract expires without being renewed this is a dismissal although it may be easier to show that the dismissal is fair. The reason for treating fixed term contracts like this is that otherwise it would be too easy for employers to employ staff on fixed term contracts and avoid the unfair dismissal laws by not renewing. Where someone is employed on a project or to undertake a specific task the same rule about fixed term contracts is extended to them by the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002.
constructive dismissal
If an employee resigns because of the way they have been treated by their employer this can amount to constructive dismissal. Essentially the employee may do this if the employer commits a very serious breach of the contract of employment so that the employee is entitled to terminate it without giving the contractually agreed notice. Serious breaches would include altering terms and conditions of employment without contractual power to do so, not paying wages, bullying, breach of the obligations of mutual trust and confidence. The case of Western Excavations v Sharp [1978] QB 761 remains important.
Frustration?
Can a contract of employment be terminated by frustration if, e.g. the employee is suffering from a long term illness? In theory the answer is ‘yes’ but as with all frustration situations one must first see what the contract says about the situation. Where the contract contains detailed provision relating to sick pay, health insurance, early retirement on health grounds, this should be treated as the contractual allocation of risk. Even where the contract provides no detail on what is to happen in the event of illness or other potentially frustrating events it will often be preferable to treat the employee as dismissed and require the employer to justify it.
Effective date of termination (EDT)
This is important in two respects:-
Determining if the employee has two years continuous service.
Tribunal proceedings must be instituted within three months of the effective date of termination.
Dismissal with notice is when the notice expires. Payment in lieu of notice (PILON) is when you are told to go. Dismissal without notice, i.e. summary dismissal, is generally when told to go. But in the Societe General v Geys case we saw that dismissal took effect when the employer exercised the contractual right to dismiss. So there is an unsettled point of law about cases where summary dismissal is a fundamental breach of contract not accepted by the employee.
Appeal
Disciplinary appeals? It basically depends on whether the procedure suspends the employee or allows for reinstatement if the appeal is upheld. This in turn depends on what the contract of employment says. In the former case the effective date would be when the appeal process ends if it ends with dismissal. In the latter case the effective date is when the employee is told ‘you’re fired’ unless (s)he is reinstated. McMaster v Antrim BC [2010] NICA 45.
Admissible reasons for dismissal
If the employee can prove dismissal the employer must show that dismissal was for an admissible reason. These are listed in section 98 of ERA:-
1. Capability or qualifications of employee;
2. Conduct;
3. Redundancy;
4. That continued employment would be in breach of a statutory obligation; or
5. Some other substantial reason SOSR.
Procedural justice
In addition to being satisfied of one of the admissible grounds for dismissal the tribunal must be satisfied that the employer acted reasonably in treating this ground as a sufficient reason for dismissal. It used to be the law that the employer had to demonstrate both an admissible reason and that it acted reasonably in treating this as sufficient reason to dismiss. But now the employer only carries a burden of proof in relation to the reason. There is no burden of proof on the employer to show that it acted reasonably here although the tribunal must be satisfied of this. The kind of things covered by this requirement of procedural justice are:-
Going to capability of an employee, did the employer offer/provide training and support?
Conduct – did the employer carry out a reasonable investigation into the allegations made against the employee?
In all cases did the employer have to dismiss? Was there any alternative?
Procedural justice
It is difficult for employees to show that the decision to dismiss was disproportionate. This is the third of the three questions listed above. Decisions of the EAT and Court of Appeal have consistently stated that the tribunal should not substitute its opinion for that of the employer’s. Its’ role is one of judicial review on questions like that.
A more employee centred approach is taken in relation to the first two questions above. Here there is an onus on the employer to take active steps by providing support and investigating fairly. But once the employer has done that and the issue becomes whether dismissal or some less drastic disposition of the problem should be adopted the employee’s task in demonstrating unfairness becomes more difficult.
An employer would likely lose an unfair dismissal case relating to misconduct or poor performance if it did not have and follow a satisfactory disciplinary and grievance procedure. The ACAS Code of Practice recommends a reasonable investigation into allegations; putting allegations of misconduct or poor performance to employees in writing; a disciplinary hearing where the employee can challenge or answer allegations (note here the statutory right to be accompanied by fellow worker or trade union official where disciplinary sanctions could be imposed ERA 1999 ss 10-13); and an appeal.
A particularly difficult issue of procedural justice concerns situations where evidence becomes available after the event. In Devis v Atkins [1977] AC 931 the House of Lords held that the employer’s decision had to be judged in light of what it knew or ought to have known at the time of dismissal. Subsequently discovered evidence was irrelevant because the question was whether the employer acted reasonably in treating the reason for dismissal as sufficient when that decision was made. In West Midlands Co-op v Tipton [1986] AC 536 the House of Lords held that evidence showing a dismissal unjustified that came to light during an appeal process was relevant because the appeal was part of the dismissal process. Evidence of further misconduct that came to light during the appeal process would be irrelevant although it could support a fresh dismissal. This insistence on judging the fairness of dismissals only in light of what the employer knew or ought to have known at the time of dismissal explains why employers can’t get away with the argument that it did not matter that proper procedures were not followed as the outcome would have been the same if they were. It remains open to a tribunal to reflect the lack of substantive merit in an employee’s case through the remedy.
Capability & qualifications
The ability of an employer to rely upon this ground depends much on whether adequate training was given and whether sufficient warning was provided that performance was unsatisfactory. Particularly difficult cases are those where the nature of the job has changed and an employee did not adapt sufficiently.
Ill health is a capability issue. Good communication between the employee and the employer is very important here. Employee should keep the employer informed about his/her state of health and the employer should be open about the options that may be pursued, i.e. is this a redeployment situation or dismissal? In considering the reasonableness of dismissal much depends on whether redeployment or early retirement was considered. The employee is not obliged to provide confidential medical information but failure to do so may force the employer to make a decision based on limited information. Ill health and disability discrimination issues shade into one another. Similar procedural standards apply to capability as with misconduct. There is no clear dividing line between the two.
Conduct
Procedural justice is key in conduct dismissals – see the ACAS code. Disciplinary rules need to be clear and readily available. They should cover issues like timekeeping, absence, health & safety, the use of facilities, discrimination, bullying and harassment, personal appearance, and gross misconduct. Disciplinary procedures should respect the principles of natural justice. There should be disclosure of the nature of allegations; an opportunity to challenge those allegations; hearings should be before an independent party.
As regards the sanctions for misconduct there are common assumptions about verbal warnings, written warnings, final written warnings etc. There are no hard and fast rules to that effect. Verbal, written and final written warnings are preferable to dismissal unless the misconduct is gross and merits summary dismissal. An employee’s length of service and record are both relevant. Sanctions for misconduct should be proportionate and alternatives to dismissal considered. However sanctions such as demotion or reduction in pay would be breaches of the contract of employment unless the contract permits taking these steps.
There is no legal burden or level of proof as regards allegations. To justify a dismissal in this respect the employer has to carry out a reasonable investigation and to have an honest and reasonable belief that the employee committed the act alleged.
Allegations should be put to the employee and the latter should be given a chance to explain. If there is a police investigation the employee may be advised to say nothing and account should be taken of that in drawing conclusions. If suspension is used as part of the disciplinary process it is generally better that this be with pay. Reilly v Sandwell MBC [2018] UKSC 16; [2018] ICR 705 is an interesting case on misconduct.
Redundancy
Unfair dismissal awards are higher than redundancy payments so the mere fact that the employee will get some money will not necessarily mean no claim of unfair dismissal will be made. If the employer can demonstrate that this is a redundancy situation that will usually mean there is no unfair dismissal. There can be an unfair dismissal in redundancy situations where there was no or no fair selection process for redundancy. If criteria have been agreed with a recognised trade union or duly appointed employee representatives and the criteria have been fairly and reasonably applied there is not likely to be any unfair dismissal. There needs to be prior consultation with the employees affected by redundancy or their representatives. Redeployment as an alternative to redundancy should also be considered.
Statutory prohibition
If employing someone would now contravene a statutory prohibition, dismissing that person would be fair. E.g an employee is employed as a driver and is disqualified from driving. Redeployment to a non-driving job should be considered but may not be practicable. There would be no intrinsic unfairness in dismissing an illegal immigrant but employers must not rush to that step as the illegal immigrant status may be regularised.
Some other substantial reason SOSR
SOSR on the face of things this is a little like the Queen of Hearts in Alice in Wonderland – “whenever I use a word it means whatever I want it to mean.” There are two situations where this has been used with a measure of regularity: -
Where a business is struggling and the employer offers an employee a different contract but the employee refuses. Tribunals have been reluctant to second guess employer decisions to dismiss for this. It is noteworthy that in a redundancy situation the employee gets a redundancy payment but gets nothing here unless the dismissal is unfair.
Pressure from third parties. An example of this is where you get an employee in a middle ranking managerial position who does not get along with other employees. But this really should be treated as incompetence or misconduct. There are cases where employees have been fairly dismissed despite the fact that the employer could not have relied itself upon the problem the third party had with the employee.
Automatically unfair dismissal
for a automatically unfair dismissal two years’ continuous employment is not required and the employer cannot justify dismissal. We met some of these in Statutory Employment Rights. A few examples:-
ERA section 100 – complaints about health and safety, refusing to work because of health and safety concerns. No upper limit on compensation.
ERA section 103A – protected disclosure. This is where an employee ‘blows the whistle’ on misconduct by others or things happening in the work place that constitute illegality.
ERA section 104 – asserting a statutory right.
Remedies for unfair dismissal
A tribunal is required to consider reinstatement to the unfairly dismissed employee’s former job or re-engagement in a similar job before all other remedies. If the employer fails to abide by the decision of the tribunal additional compensation is ordered. But this remedy is rarely used. One reason is that tribunals often think it impracticable to order a ‘love in’ between two parties who have completely fallen out. More often than not the employee does not want it anyway. Many tribunal applicants have already obtained other employment and don’t want to give up a compensation claim to go back to an employer they could see far enough. So compensation is nearly always the remedy. This consists of a basic award and a compensatory award. The basic award is a redundancy payment. It can be reduced if the employee’s conduct contributed to the dismissal.
The compensatory award is to compensate for those benefits the employee has lost because of dismissal. Pay and other benefits until date of tribunal decision less pay earned from another job and social security benefits are included. If a new job pays less and likely will continue to something will be included for this. All employment benefits, including pension are taken into account here.
There is a statutory limit on the compensatory award – ERRA section 15 gives power to Secretary of State to set it. The maximum amount that may be awarded as compensation for unjust dismissal will rise from £93,878 to £105,707. These price hikes are a direct result of the huge rise in the consumer price index, which was 12.6% higher from September 2021 to September 2022. Awards may be reduced to take account of the employee’s contribution to dismissal.
Awards tend to be modest and the financial burden of bringing a claim is heavy. Only seldom can a losing employee be required to pay costs to the employer but there never has been legal aid for these cases. Many employees can’t afford legal representation for these very complex cases. To give you an idea of the amounts that the Employment Tribunal often makes for unfair dismissal in practise, the largest compensation for wrongful dismissal in 2021–2022 was £165,000. The median reward was £7,650, while the average was £13,541.
