Dismissing the fair way

With the qualifying period for unfair dismissal reduced to one year for dismissals on or after 1 June 1999, the maximum compensatory award being raised from £12,000 to £50,000 for dismissals after 25 October 1999 and with discrimination and stress claims on the increase now is the time more than ever for employers to adopt and utilise 'fair' procedures.

It is obviously good business practice to avoid the need for dismissals in the first place. More time should be placed on recruitment of candidates and development of employees by way of regular appraisals. It is also a good idea to adopt the European model of longer probationary periods within which to assess employees. However, inevitably some employees will not live up to expectations and you will be looking for the most cost effective and, therefore, 'fair' way of dismissing them.

In order to dismiss an employee fairly and (in respect of those with service of one year or more) avoid liability for unfair dismissal, you will need to find one of the five fair reasons (redundancy, lack of capability or qualifications, misconduct, breach of a statutory duty or some other substantial reason). In addition to finding a fair reason you will also need to show that you have adopted a fair procedure in dismissing that employee and have acted reasonably in all the circumstances.

The recent case of Haddon vs Van Den Burgh Foods is significant as until that case an employment tribunal had to decide whether the employer's decision to dismiss was in the band of reasonable responses. If it was, it was deemed to be fair. In the Haddon case the employment appeal tribunal decided that it must look at the decision in the circumstances of the particular case 'having regard to equity'. This makes things more difficult for the employer as a tribunal will be able to have regard as to what they think is reasonable. It will not be sufficient for your response just to be within the band of reasonable responses.

While it is not always possible to avoid an employee bringing a claim there are very easy steps you can take to minimise the risk of them doing so or, at the very least, reduce the level of any award made by a tribunal. Below are a few of the hot favourites.

Always provide employees with written contracts of employment. The Employment Rights Act 1996 prescribes minimum particulars which you are obliged to provide such as place and hours of work, salary etc, so, if you are drafting an employment contract, why not use the document to your advantage and at the same time let employees know what is expected of them.
Do not confuse a redundancy dismissal with a capability dismissal. It will almost always lead to a finding of unfair dismissal. While poor performance can be taken into account as part of an objective criteria for selection for redundancy, tribunals will not countenance employers using the redundancy procedure to dismiss an employee who should really be put through a disciplinary procedure.
If you have a genuine redundancy situation ie you need fewer employees because the requirements of the business for that type of employee have ceased or diminished, you need to follow a proper procedure.

First, decide upon the pool of potentially redundant employees and, secondly, decide upon fair objective criteria for the selection of employees within that pool. Thirdly, announce the pool and criteria and finally consult. Beware of discriminating in selecting the pool and adopting the criteria.

Once the employees for redundancy have been selected, consult with those employees again. Be prepared to be flexible. Think about job shares, part-time work, unpaid sabbaticals etc. Listen to any suggestions your employees have to avoid redundancy. Document this process fully.

For large scale redundancies be aware of your additional obligations with regard to the period of consultation and notification of the Department of Trade & Industry.
If you are compromising a claim by paying what you believe or have been advised is a reasonable payment always insist upon the employee seeking independent legal advice and entering into a compromise agreement. This will preclude employees from accepting the money on offer and subsequently bringing a claim for unfair dismissal.
If you are dismissing by reason of poor performance, the usual questions for the tribunal will be:
- Did the employee know they were not performing?
- Were they given an opportunity to improve?
- Were they offered training and were they aware that if they did not improve their employment would be in jeopardy?
It is for these reasons that you need to follow a disciplinary procedure - contractual or otherwise. Give adequate warnings, document them and give a realistic time scale for improvement. Provide for an appeals procedure if an employee is unhappy with the warning. Make it clear when a warning is a final warning and if dismissal results, give proper notice.
Summary dismissal for gross misconduct should be used cautiously and must always be subsequent to a full investigation. Keep any disciplinary proceedings and investigations separate. Carry out your investigation, involve the employee and then bring it to a close. If disciplinary action is deemed appropriate, call the employee to a disciplinary hearing, give adequate notice of it and provide written details of the allegations, give the employee an opportunity to be accompanied. Listen to what they have to say before making the decision to dismiss and always be clear as to who is making that decision.
Make sure your disciplinary procedure provides for an appeal by a differently constituted body and ensure that this is a re-hearing.
When dismissal has occurred, provide written reasons for the dismissal. Since 1 June 1999 all employees with one year's continuous employment are entitled to this and failure to provide it on request can lead to an extra award of two week's salary.
Take steps to avoid discriminatory behaviour in the work place. Adopt an equal opportunities policy and make sure all employees are aware of it. Provide training so your workforce are aware of what constitutes sex, race or disability discrimination, particularly for managers. These claims are on the increase and there is no limit to the compensatory award. Adopting such a policy can help you avoid responsibility for discriminatory acts carried out by your employees of which you may have been unaware.
Stress claims are also on the increase. These claims generally take the form of claims for personal injury. In a recent case the award was over £67,000. Look out for the warning signs, lateness, lack of motivation, poor performance, absence etc. You have a duty to provide a safe place of work and if you do not you can be held liable. Once you are aware somebody is in difficulty act immediately. Consult with their doctors and, if appropriate, obtain an independent medical opinion. When they are ready to return to work obtain a certificate of fitness from their doctor. Consult with them and medical staff as to ways to avoid repeat problems in the future.
Summary

Claims are on the increase and with the influence of the EU, there are many other developments, such as parental leave, time off for dependants, flexible family friendly policies and the working time regulations with which employers are having to grapple. By using well drafted contracts of employment, appraisal systems and proper disciplinary procedures, you can do much to protect your business.

This article is designed to provide a brief summary of the subject matter. It does not purport to be in any way comprehensive or a substitute for specialist legal advice in individual circumstances.