Unfair and wrongful dismissal claims are costly and time-consuming

The dismissal of an employee for a reason other than one allowed by law, without following the correct procedure, or without giving adequate notice, is likely to lead to a claim for unfair or wrongful dismissal. The damages for a successful claim can sometimes be substantial. Regardless of whether a claim succeeds, the costs of defending it, in particular in terms of management time, may be significant.

How can employees be dismissed lawfully?

There must be a fair reason for the dismissal

The dismissal can only be for a fair reason if:

• It relates to the employee's conduct.
• It relates to the employee's capability or qualifications.
• It is because of redundancy.
• It is because the employee has reached the normal retirement age.
• Continuing to employ the employee would be illegal - for example, as a result of their immigration status.
• It is for "some other substantial reason" (SOSR). This is understood to be a fair reason that does not fall under the other categories. For example, the dismissal of a temporary employee to allow for the return of an employee who has been on maternity leave is likely to be a dismissal for SOSR.

A dismissal for any other reason would be unfair.

Generally, employees must have been employed for one year before they can bring a claim for unfair dismissal. However, certain types of dismissals are deemed automatically unfair and employees are protected as soon as they start work. These include dismissals for reasons connected to pregnancy.

The employer must follow a fair procedure

Even if there is a potentially fair reason for dismissing an employee, an employer must still follow an appropriate fair procedure before deciding whether to dismiss.

In cases of misconduct or poor performance, the employer should comply with the Acas Code of Practice on Disciplinary and Grievance Procedures Failure to do so may lead to a finding of unfair dismissal and the tribunal may increase compensation by up to 25% if the failure was unreasonable. For dismissals on the grounds of retirement, employers are required to implement a "planned retirement" procedure as the employee approaches retirement age. They must give the employee at least 6 months written notice of the proposed retirement date, and consider any request by the employee not to retire.

For other types of dismissal, including redundancy, there is still a requirement to follow a fair procedure. It is important to give an employee sufficient information about the reasons for their possible dismissal, and the opportunity to respond at a hearing or meeting, before reaching a final decision. It is also advisable to give a right of appeal in most cases.

The employer must act "reasonably"

Even if there is a potentially fair reason for the dismissal, the employer must be able to show that it acted reasonably in dismissing the employee for that reason. This will involve taking into consideration different factors, depending on the reason for dismissal. For example, where an employee is being dismissed because they are not capable of doing the job, an employer will usually have to give the employee a chance to improve.

All the circumstances, including the size and resources of the employer, will be relevant when determining whether it acted reasonably.

The employee should be dismissed in accordance with their notice period

Except in cases of gross misconduct, employees have a right to receive a period of notice, depending on their contract, if their employment is terminated. Unless the notice period is set out in the contract a reasonable notice period is implied. In any event the notice period must not be shorter than, statutory notice period.

An employer's failure to give adequate notice or payment in lieu before dismissing an employee is likely to result in a wrongful dismissal, for which the employee can claim loss of earnings and benefits to which they would have been entitled during their notice period.