RONAN BUTLER of Clarke Mairs LLP explains why employers should take steps to reduce the risk of potential claims relating to a dismissal

MANAGEMENT TIME AND COSTS

Dismissing an employee for an improper reason or without following the correct procedure can lead to claims for unfair and wrongful dismissal.

Whilst the average award for unfair dismissal claims in 2010/11 was not particularly high at £4,591, it can be substantially more and even if compensation isn’t awarded, the management time and irrecoverable costs of defending a claim are likely to be significant.

LAWFUL DISMISSAL

Dismissing an employee lawfully requires employers to:

have a fair reason for dismissal

follow a fair procedure

act fairly and reasonably in the process

comply with the terms of the employment contract

not discriminate unlawfully

The reason will only be a fair reason if it is by reason of:

conduct

capability/qualification

redundancy

illegality

some other substantial reason which does not fall within one of the other reasons.

Generally, to bring an unfair dismissal claim an employee whose employment started before April 6 2012 must have completed one year’s employment, but if the employment started on or after that date the period is now two years.

DUTY TO FOLLOW A FAIR PROCEDURE AND ACT REASONABLY

Even with a fair reason for dismissal, an employer must still follow a fair procedure before deciding to dismiss.

For misconduct or poor performance, the employer should comply with the ACAS Code and failure to do so may lead to a finding of unfair dismissal and an increase in compensation.

For all other reasons, a fair procedure must be followed, so it is important to give the employee sufficient information about the reasons for the possible dismissal and the opportunity to respond before a final decision is made.

Additionally the employer must be able to show that it acted reasonably in dismissing the employee for that reason. This will involve taking into consideration other factors.

For example, where an employee is being dismissed because they are not capable of doing the job, an employer will usually be required to first give the employee a chance to improve.

DISMISSAL IN ACCORDANCE WITH THE CONTRACT

As well as following the statutory procedures, the employer mustn’t forget that under the employment contract the employee has the right to receive notice of termination (unless for gross misconduct) and may have other agreed rights.

Unless the notice period is set out in the contract, a reasonable notice period is implied, however this cannot be shorter that the statutory minimum notice.

Employers who breach an employment contract will face a claim for wrongful dismissal and could lose the benefit of any restrictions on the employee e.g. preventing the employee working for a competitor.

PRACTICAL STEPS TO REDUCE THE RISK OF POTENTIAL CLAIMS

Employers should take steps to reduce the risk of a potential claim relating to a dismissal:

Resolve problems when they emerge by meeting the employee, but make it clear that a formal process may be used if the problem is not resolved.

Be careful in correspondence with employees. Aggressive emails should never be sent.

Keep records of all correspondence with employees.

Undertake regular appraisals and allow employees an opportunity to raise concerns.

Use probationary periods effectively.

Do not sideline or bully an employee to get them to leave – if the employee resigns but says it was because he was forced to do so the employer can still face a claim.

Fully investigate any claims made by or against employees and allow them to tell you their side of the story.

If the decision results in dismissal, ensure the employee is given notice in accordance with the contract.

If an employee has raised a grievance or claim in the past, be very careful to ensure that any allegations against that employee are dealt with fairly.

From both a practical and commercial point of view, it is better to try to reach a financial agreement with an employee to leave.

There are risks in proposing such a solution, so employers are advised to tread carefully before entering into any such negotiations.

If an agreement can be reached, it is prudent for the employer to ask the employee to sign a Compromise Agreement, which should protect the employer against future claims.

For further information on employment issues, contact Ronan Butler at Clarke Mairs LLP on 0191 245 4724 or by email at rb@clarkemairs.com.