Bridge HR articles

Well, in a typical legal response - Yes and No.

Yes – if the employee has been employed for at least 2 years.

No – if they are well within their first 2 years (remember the statutory extension of service when close to two years).

What are the potentially fair reasons for dismissal in law?

Section 98 of the Employment Rights Act 1996 (ERA) states that if an employee is dismissed after at least 2 years of employment, the employee has the right to claim unfair dismissal. But, don’t forget the Equality Act 2010 and Whistleblowing law (among other areas of law) allows for claims under 2 years.

If you do dismiss, you have to provide a potentially fair reason for the termination and it is crucial that that reason fits with the process you follow and the evidence you rely on to dismiss. If not, the dismissal can be unfair and compensation can follow.

The law lays down five such reasons:

• Incapability
• Misconduct
• Redundancy
• That continued employment is illegal
• Some other substantial reasons such as to justify termination (this is a catch-all to cover many scenarios - a common one being the breakdown in relationships).
  
  

Importance of the reason

It is important for the employer to correctly identify the following:

1. Has it terminated the employment or has the employee resigned or was the termination by mutual agreement?
2. If a termination by the employer, what then was the lawful reason? 
   
   

A case to illustrate the importance of the reason chosen

In Riley v Direct Line Insurance Group PLC, an unfair dismissal claim was brought.

The employer had dismissed the employee on grounds of incapability due to ill health.

The Tribunal held that, although the employer had informed him that he was dismissed, the reality was that the claimant had actively sought the ending of his employment in order to then receive payments under a Private Health insurance scheme.

The Tribunal rejected his unfair dismissal claim on the basis that he had not been dismissed; the termination had been by mutual agreement.

The business won, but it had to endure the stress, hassle and legal costs of fighting the claim.  This could have been avoided by ensuring it had correctly identified and recorded the correct basis for the termination in the first place.

Situations can arise where the employer has grounds for termination on the basis of gross misconduct but chooses to be “nice” to the employee and makes them redundant instead.

Not only does this mean them paying a redundancy payment and notice pay, but also leaves them open to an unfair dismissal claim if the procedure followed was not legally compliant and/or if it was not a genuine redundancy situation.

Conclusion

It is wise to take legal advice prior to terminating employment.

It will, in some cases, be fairly straightforward and not therefore expensive to ensure the process is correct.

If the situation is more complex, inevitably, it will require more time and thus cost but not in comparison to the time and cost required to fight a claim.

Shaun Pinchbeck has been advising businesses in respect of these scenarios for over 30 years. If you have any queries, and/or wish to have a free no commitment conversation with Shaun, feel free to email shaun@bridgeehr.co.uk or call him on 07548 767505.