What is unfair vs fair dismissal?
UK law is known for its emphasis on protecting workers’ rights, so dismissing a permanent employee without following the appropriate procedures can have legal repercussions.
1. Unfair reasons for dismissal
If you were to dismiss an employee without a legally valid reason or adhering to the proper legal procedure, this would be classified as an unfair dismissal. In such cases, an employee with at least two years of continuous service with you is eligible to initiate an unfair dismissal claim. There are certain circumstances under which an employee can still make an unfair dismissal claim without having worked for your company for two years – this is considered an automatically unfair reason for dismissal.
2. Fair reasons for dismissal
If you have a valid reason for needing to dismiss your employee, and it’s one that the UK government has predetermined as valid, this can lay the foundation for a fair reasons dismissal. Next, you are required to take certain steps in the dismissal process. Below, we look at possible fair reasons to dismiss an employee and the procedures to follow.
Fair reasons for dismissal in the UK
Fair reasons for dismissal in the UK can be roughly broken down into five categories.
1. Conduct
A dismissal on the grounds of misconduct relates to unacceptable behaviour by an employee. Typically, this behaviour needs to be ongoing, with attempts to address it unsuccessful. However, certain behaviours can be grounds for immediate dismissal. Dismissal on reasons of conduct can be divided into three subtypes:
1.1 Misconduct
General misconduct can include behaviours such as repeated lateness, frequent absences without a proven reason, insubordination, not following instructions, unprofessional conduct with colleagues or clients, a poor attitude or rude behaviour, minor breaches of company policy or misuse of company equipment. One-off or minor incidents of this type are not usually considered grounds for dismissal.
1.2 Gross misconduct
Gross misconduct is far more serious than general misconduct. A single incident of gross misconduct is usually sufficient grounds for dismissal, provided the correct procedure is followed. Examples of gross misconduct include theft or fraud, other illegal activities, physical violence or verbal abuse, harassment (including sexual harassment) or discrimination, purposeful damage to company property, use of drugs or alcohol at work and serious breaches of health and safety regulations, confidentiality or data protection, among others.
1.3 External misconduct
Misconduct outside of work can be grounds for a fair dismissal if the behaviour impacts the employee’s professionalism or performance (e.g. drug use) or damages (or has the potential to damage) your company’s reputation. Establishing clear policies and guidelines for a code of conduct can ensure that all employees know how to behave. Including a social media policy addressing online behaviour and monitoring and enforcing conduct policies can help your teams to remain compliant.
2. Performance and capability
An employee being unable to perform their job to the required standard can also be considered a fair reason for dismissal.
2.1 Performance
Consistent poor performance can be grounds for a fair dismissal, provided you have given opportunities for the employee to improve. Poor performance generally refers to an employee’s inability to keep up with the role’s demands, carry out expected duties and meet KPIs. Depending on the circumstances, you may be required to first issue warnings, provide the employee with extra training or place them on a performance-improvement plan with measurable objectives before proceeding with dismissal.
2.2 Capability
Capability refers to whether an employee is able to perform the duties required for their role. Dismissing an employee on the grounds of capability is a very delicate matter. Understanding the reasons why an employee’s performance needs to improve can ensure you are not discriminating against a protected characteristic, such as a physical or mental disability or illness. Dismissal is typically a last resort. You may be required to arrange a health assessment, request a medical report, make reasonable adjustments to support the employee in their job or consider alternative roles in your company for the employee.
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3. Redundancy
Redundancy is possibly the most straightforward reason for a fair dismissal. Over time, businesses may determine that there is no longer a need for certain roles and that continuing to employ people in such positions full-time is not cost-effective. The business may decide to make that role and the employee performing it, redundant. Companies in financial difficulty can also decide to make some of their less critical roles redundant to stay afloat. The third situation in which redundancy can occur is when an entire company, department or branch is closing down. In this case, multiple employees are made redundant simultaneously. Even though redundancy is a fair reason, you are still required to take certain steps. This typically involves a mandatory consulting process with the affected employee/s, a stipulated notice period, statutory redundancy pay (calculated according to an employee’s age and length of service) and informing them that they have a right to appeal the redundancy. You are also expected to consider whether there are any other positions the affected employee could potentially move to within the company. Once an employee has been made redundant, you are not allowed to recruit for that same position.
Related: What are boomerang employees?
4. Statutory illegality
This refers to circumstances under which it would be illegal to continue employing the person in their role. Examples include a foreign employee who loses their right to work in the UK or has their work visa run out, an employee whose duties involve driving losing their driving licence or an employee being convicted of a crime when their role legally bars people with criminal records (e.g. they work with vulnerable people).
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5. Some Other Substantial Reason (SOSR)
This category is broad and includes reasons that do not fit into the other categories. Reasons could include the non-renewal of a fixed-term contract, business reorganisation needs, a significant breakdown in trust, conflicts of interest and interpersonal conflict involving important clients or stakeholders, among others. Ensuring a fair dismissal may necessitate legal advice, as an employer don’t hesitate to seek it before initiating the process.
What reasons are considered an unfair dismissal?
Dismissing an employee for any of the following reasons could result in legal action against you. The employee:
- Requested flexible working or reasonable adjustments
- Resigned with the correct notice period
- Joined a trade union or took part in legal industrial action (lasting 12 weeks or less)
- Was called up for jury service
- Is pregnant, on parental leave or has requested parental leave
- Reached retirement age
- Exposed wrongdoing in the workplace (whistleblowing)
Disciplinary procedures for a fair dismissal based on conduct
Dismissing an employee on the grounds of misconduct or gross misconduct, it is important to follow a procedure to help ensure you remain fair. Some of these steps may also apply to performance-related or SOSR dismissals.
1. Investigation
Investigate any allegations thoroughly to gather and verify facts.
2. Warnings or suspensions
Verbal or written warnings are often necessary for general misconduct or poor performance, giving employees notice of potential dismissal and an opportunity to improve. For gross misconduct, an immediate suspension may be appropriate to protect colleagues, clients, or the company’s reputation while the disciplinary process is carried out.
3. Disciplinary hearing
Depending on the severity of the allegations, a hearing is typically required for cases of gross misconduct, allowing the employee to present their side of the story.
4. Outcome
If misconduct or performance issues persist after these steps, dismissal can be justified. In cases of gross misconduct, once the disciplinary hearing concludes, immediate dismissal (known as summary dismissal) is often appropriate.
Understanding the distinction between fair and unfair dismissal is important to maintaining legal and ethical standards in your business. Fair dismissal is a delicate process requiring careful consideration of the reason and following procedures to ensure a respectful and transparent process for everyone involved.
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