Dismissing an employee can be a complicated and sometimes lengthy process, a difficult time for all concerned and it is never a decision to take lightly.  After all, the consequences of getting it wrong could be catastrophic, not only for the business but also for the employee and their future career.  

This article will outline some common mistakes employers make when dismissing employees. If you follow the tips detailed below you can make sure the process goes as smoothly as possible for everyone involved. 

Not Following the Proper Procedure 

One of the most common mistakes employers make when dismissing an employee is not following the proper procedure.  Regardless of having a fair reason for the dismissal or not (see below), failure to follow a fair procedure will usually make an otherwise fair dismissal unfair. This includes the employer following its own policies, any contractual or statutory obligations, and in relation to conduct and performance dismissals, following the Acas Code of Practice.

Ultimately, to avoid a finding of unfair dismissal at an Employment Tribunal, an employer needs to show that it acted reasonably in all of the circumstances, both in treating the reason as sufficient to dismiss and following a fair procedure. 

When dismissing an employee, remember it’s best to tell the employee: 

• why they’ve been dismissed 
• when their employment contract will end 
• their notice period, if there is one 
• their right to appeal the decision 

And it’s a good idea to put it in writing. 

The right to appeal the dismissal is particularly important to note as it’s part of the Acas Code of Practice and failing to do this can be counted against the employer if the case goes to an Employment Tribunal. Similarly ensuring notice periods are properly reflected (also taking into account any variations if the employee is still in their probationary period), pay in lieu of notice clauses and garden leave clauses is another important factor. 

If you’re not sure what the proper procedure is for dismissing an employee, be sure to consult with an HR professional before taking any action. 

Ignoring the Five Fair Reasons for Dismissal

 There are 5 potentially fair reasons for dismissal: 

• Conduct 
• Capability 
• Redundancy 
• Statutory illegality or breach of a statutory restriction 
• Some other substantial reason 

Employers often either fail to identify the potentially fair reason or identify (or use) the wrong reason in the circumstances. Each potentially fair reason for dismissal dictates which procedures the employer should follow in order to carry out a fair dismissal. Ignoring this would make it difficult for an employer to show it had acted reasonably, thereby increasing the risk of an unfair dismissal claim 

Suspending Unnecessarily or Without Justification 

It’s common for some employers to suspend an employee whenever there is a sign of misconduct, especially if there’s an allegation of gross misconduct and a potential dismissal.

However, it’s important not to rush to a decision to suspend without serious consideration of the facts.  The law is quite clear that suspensions should only be considered where there is likely to be a finding of serious misconduct or negligence and where there is a clear need to keep the employee away from work – for example, to investigate or to limit the damage of misconduct or negligence. 

Suspensions, even though the employee will be on full pay, need to be kept under regular review and lifted once no longer needed, to ensure that the actions taken by the employer are regarded as reasonable.  

Not Carrying out a Thorough Investigation 

A common mistake is not carrying out a sufficiently thorough investigation.

It’s easy to see one side of a situation and jump to conclusions but remember an investigation must be fair and look not only for evidence that makes the employer sure that their employee has not performed or conducted themselves as expected, but also look for evidence which mitigates the allegation(s) or supports a view that the allegation(s) might be unfounded. 

The investigation should look at the full circumstances in which the employee has acted. It should be fair, balanced and seek the true facts.  

Lack of Clarity 

Clear rules and clear standards of performance will help employers to demonstrate that expectations have been set regarding what is and isn’t acceptable. Making the consequences of underperformance or misconduct explicit is also important. These can be set out in company policies, a handbook, in job descriptions or as part of the performance management process, as appropriate. 

Ignoring a Disability 

Always think not only about what has happened by also why. 

If an employee has a disability, it’s possible that the reason for their under-performance or misconduct is connected in some way to their disability or to the disability of someone they are caring for. In these situations, reasonable adjustments should be made in making any decision to discipline or dismiss as this could become an unintentional act of disability discrimination. 

Breaching the Contract of Employment 

It’s important to be careful not to breach an employee’s contract of employment when dismissing them, for example by failing to give adequate notice, not paying other contractual entitlements, or terminating a fixed-term contract early.  Any breach of contract would also result in the employee having a claim for wrongful dismissal. 

Settlement Agreements 

Some employers mistakenly think that having an off the record (“protected”) conversation with an employee when offering an exit package will always protect them and make the conversation inadmissible in any future proceedings as evidence. Many employers fail to consider that although protected conversations can be used when there is no genuine dispute at the time, they can only be used and protect the employer in ordinary unfair dismissal cases, not dismissals that are automatically unfair or where there is discrimination. In addition, there must not be any ‘improper behaviour’ during the process, such as putting undue pressure on the employee in the form of bullying or intimidation. 

Similarly, employers are often not aware that the more general “Without Prejudice” rule, which is broader in scope, only applies where there is an existing dispute between the parties. 

Encouragement to Resign 

Employers who are considering dismissing an employee may be tempted to invite them to “jump to avoid being pushed”. This may be regarded as an act of kindness towards the employee or to save the employer having to go through a fair capability or disciplinary process. However, if the employee is left to feel that they had no choice but to resign, it could result in a claim for constructive unfair dismissal due to a breach of trust and confidence. In these circumstances, it would be more difficult for the employer to show that a fair process had been followed. While this approach may pay off, employers need to act with extreme care and seek advice where appropriate.  

“But they’ve got less than 2 years’ service so we’re ok!” 

Employers need to be aware that in certain circumstances employees are able to tack on the statutory minimum notice to their length of service, which gets them over the line to the two years’ service requirement for an ordinary unfair dismissal claim. Therefore, particular care should be taken with regard to the date of the dismissal where it is close to the employee’s two-year work anniversary and employers should be mindful of any periods of contractual or statutory notice that may apply. 

Also, there are certain circumstances in which employees do not need the qualifying period of two years to bring an unfair dismissal claim. Claims for discrimination under the Equality Act 2010 and a few other exceptions are examples. 

And don’t Forget….

Whether an employee is being dismissed or leaving of their own accord, it’s essential not to get caught up in the emotion of the situation and to follow your own leaver process; payroll actions, issue P45, notify pension and benefits providers, ensure company property, equipment and other property is returned and cancel IT access. 

The Potential Implications If These Steps Aren’t Followed 

The consequence of not following these steps is that you will increase your risk of employee disputes and potential claims to an Employment Tribunal, which can be costly and disruptive to defend.  Far better to get things right and if you can, set-up your team for success so you’re not in the position of having to dismiss anyone! 

Compensation Awards 

It is also vital to take into account the compensation awards that could be made by an Employment Tribunal if a case is found against you. Here are the current figures, as at April 2022: 

Maximum week’s pay for calculating redundancy and unfair dismissal basic award: £571.00  

Maximum basic award for unfair dismissal and statutory redundancy payment: £17,130.00  

Minimum basic award for dismissal on trade union, health and safety, occupational pension scheme trustee, employee representative and on working time grounds only:  £6,959.00  

Maximum compensatory award for unfair dismissal (unlimited for certain automatically unfair dismissals, for example, health and safety or whistleblowing):  £93,878.00 

Dismissing an employee is never easy, but hopefully this article has given you some guidance on how to do it correctly. If you have any questions, or if you need assistance with any aspect of the dismissal process, please don’t hesitate to contact us.  

We’re here to help.