THE MARSHALL & GALPIN GUIDE TO UNFAIR DISMISSAL

The most commonly utilised claim in the employment tribunal is a claim for Unfair Dismissal (“UD”). S.94 of the Employment Rights Act 1996 (“ERA”) states “an employee has the right not to be unfairly dismissed by his employer”. The basic requirements for a claim are: a qualifying employee, a dismissal, employer not having a fair reason for the dismissal or a fair reason not implemented fairly.

WHAT IS AN UNFAIR DISMISSAL?

A dismissal can be either fair or unfair. In deciding whether it is unfair, you will need to consider whether the employee has the right to make a claim, has there been a dismissal, has the selection been fair (non-discriminatory), is the reason for dismissal automatically unfair and if fair, has the employer acted reasonably and applied the statutory dismissal procedures before carrying out the dismissal.

QUALIFICATION

An employee may make a claim for unfair dismissal within 3 months of the EDT provided the employee is below 65 years of age or below the employer’s retirement age and has at least 1 year’s continuous employment.  There are a number of exceptions to the qualification requirement of 1 year’s service the main ones being:
•   Dismissal for trade union activities
•   Dismissal relating to pregnancy, childbirth, parental/dependant’s leave
•   Dismissal for Health & Safety matters
•   Dismissal of certain shop/betting workers who refuse Sunday working
•   Dismissal for asserting a statutory right

There are a number of categories of employee who cannot claim unfair dismissal including:
•   Police Officers
•   Armed Forces
•   Share Fishermen

DISMISSAL

An employee is considered dismissed when the employer brings the contract of employment to an end. The following examples would qualify as dismissals:
•   Employer ends contract with/without notice
•   Employer does not renew/extend a fixed term contract
•   Employer compels an employee to hand in his resignation and claim constructive dismissal
•   Employer prevents a female employee returning to work after maternity leave
•   Employer refuses to take an employee back after a strike
•   Employee is placed on short time working or is laid off without express provision in the contract of employment
NB Suspension on full pay, frustration of the contract and withdrawal of a conditional job offer do not qualify as a dismissal.

There are a number of types of dismissal that are deemed to be automatically unfair:
•   Failure to follow the minimum requirements of the statutory dismissal procedures
•   Arising out of trade union activities
•   Arising out of an employee’s concerns about Health & Safety issues
•   Employee complained or brought proceedings for breach of statutory rights
•   Disability/Race/Sex Discrimination
•   Pregnancy related
•   TUPE transfer
•   Dismissal for a ‘spent’ conviction

FAIR REASONS FOR DISMISSAL

There is a 2 stage process for assessing fairness in dealing with UD.

What was the reason for the dismissal?
Under S.98 ERA 1996 it is for the employer to show that the reason or main reason for the dismissal was a fair reason namely:
(a)   Capability
Defined as assessment by reference to skill, aptitude, health or other physical/mental quality. This can be further sub-divided into 3 categories: qualifications, competence and health. NB employers need not question the genuineness of any ill-health but merely need to show that it is affecting the employees ability to carry out his duties (but look out for Disability Discrimination).
(b)   Conduct
Examples include gross insubordination, theft, fraud, drunkenness at work, disclosure of confidential information, absenteeism and persistent lateness.
(c)    Redundancy
Redundancy is a form of dismissal. If conducted fairly, it is a lawful reason for dismissal. (see further "Guide to Redundancy”).
(d)    Statutory Illegality
In rare situations it is possible to dismiss an employee where continuing the same would amount to a breach of the law e.g. employing a worker who has no work permit for the UK (S.8 Asylum & Immigration Act 1996)
(e)    Some other Substantial Reason
Widely regarded as the ‘employer’s charter’ there has been a tendency to overuse this category. It most frequently used in situations where a company re-organisation has resulted in revised roles that fall short of redundancy. Other examples include refusal to accept imposition of restrictive covenants.

Did the employer handle the dismissal fairly?
Even where an employer may have a fair reason for the dismissal, there remains the ability to take the matter to an employment tribunal if the dismissal itself has not been handled in a fair manner. To this end it is necessary to look at the fairness of the procedure resulting in dismissal and whether a reasonable employer faced with the same facts would have dismissed the employee.

Fair Procedure
Most employers will have a set disciplinary procedure and they are required to show that they have followed the procedure consistently and have acted in accordance with natural justice. This applies to not only the initial hearing(s) but any appeal hearings subsequently. NB under S.10 ERA 1999 a worker has a right to be accompanied at a disciplinary hearing though not by a legal representative. Where no set disciplinary exists, the Tribunal will look to see if the statutory dismissal procedures have been followed. Any failure to comply with the statutory procedures will result in a finding of automatic unfair dismissal. It is important for matters to be properly investigated by the employer wherever appropriate.

Actions of a ‘Reasonable Employer’
The tribunals apply a test by comparing the actions of the dismissing employer with those of a notional ‘reasonable employer’ i.e. did the employer act as a reasonable employer having regard to the size and administrative resources available. The tribunal is not allowed to impose its own standards of reasonableness and should instead see whether the decision would be followed by other employers in the same industry.

REMEDIES

See Summary above for different remedies. In relation to calculating the compensatory award reference is made to the Norton Tool principles which are broadly:
Immediate loss of wages – loss from ETD to tribunal hearing
Future loss of wages – Tribunal guesses how long the employee is likely to be out of work. Discretionary award.
Loss of fringe benefits – e.g. company cars, private health insurance, share options etc.
The manner of dismissal – did the dismissal make it harder for the employee to obtain new employment?
Loss of Statutory Employment Protection Rights – nominal figure given by tribunals to covert need by employee to work for 1 year to gain unfair dismissal rights at new employment.
Loss of pension rights – difficult area needing specialist advice. See Government publication- Employment Tribunals: compensation for loss of pension rights.
NB the Tribunals have the power to reduce or increase awards depending on whether or not a statutory dispute resolution process has been followed i.e. disciplinary procedure or grievance procedure.