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Unfair dismissal: A key cause of trouble

There are many cases of employers in the sector facing employment tribunal cases brought by disaffected employees. Take the 2021 case of Mr Joseph Coldron v Lionweld Kennedy Flooring. Adam Bernstein explores.

THERE are countless cases of employers in the sector facing employment tribunal cases brought by disaffected employees and when it comes to unfair dismissal, there’s the 2021 case of Mr Joseph Coldron v Lionweld Kennedy Flooring Limited.

In this instance, neither side came out smelling of roses. In a 19-page summary, the unfair dismissal claim succeeded despite a fair procedure, if it had been run, potentially lasting four weeks with a 90% chance that the claimant would have been fairly dismissed anyway. However, the tribunal found ‘the claimant contributed to his dismissal by reason of his foolish conduct’ and so the basic and compensatory awards were each reduced by 75%.

However, because the responding employer unreasonably failed to comply with the ACAS code, the award was uprated by 10%. Overall, Coldron was awarded £1,967.20 in wages and £496.23 for holiday pay.

And in Mr K Guinnane v DSB Flooring Specialists Limited, the claimant brought a case for breach of contract, contract of employment, unfair dismissal, and unlawful deduction from wages.

In a short report, the tribunal found the claims for unlawful deduction from wages and the same for holiday pay were well founded while the claim for breach of contract for notice pay wasn’t. It was shown the claimant wasn’t provided with a written statement of terms and conditions as required by the Employment Rights Act 1996.

Overall, an award in Guinnane’s favour was made with £1,050 for unpaid wages, £1,283.10 for unpaid holiday and £700 for the lack of a written statement of terms and conditions.

Regrettably, there are times when an employer needs to dismiss an employee. But just as there are options in life so there are correct and incorrect ways to dismiss; those that go about the process the wrong way will undoubtedly find themselves before an employment tribunal.

Indeed, mistakes can be costly with the typical award for unfair dismissal being £10,812.

It makes sense then for employers to understand the law, what constitutes an unfair dismissal, what can make a dismissal automatically unfair, and what a fair dismissal procedure actually looks like. And with numerous cases involving the sector on the government’s employment tribunal website a good understanding of the law is essential.

Understanding the basics
According to Alexandra Farmer, head of team and a solicitor at WorkNest, a fair dismissal procedure consists of two essential components – having a valid reason to dismiss and acting reasonably in the circumstances.

The Employment Rights Act of 1996 outlines five potential justifications for dismissal. The first of these is dismissal for misconduct such as theft, fraud, bullying, or negligence. As Farmer comments, ‘this could be either one serious incident that warrants dismissal for a first offence, known as gross misconduct, or a series of more minor offences, such as persistent lateness’.

The second reason is a termination based on qualification or capability. This might also involve performance or a long-term illness absence.

Next comes redundancy, or the closing of a business.

Fourth on Farmer’s list is a statutory restriction. Here Farmer says: ‘This might apply if continuing to employ the person would break the law, such as a driver losing his driving licence or a worker without the legal right to be employed’.

The last is known as ‘some other substantial reason’. For Farmer, this is a category that employers can fall back to if none of the other potentially fair reasons for dismissal are relevant. She says this may apply if, for example, ‘an employee is handed a long prison sentence, their conduct outside of work brings the employer into disrepute, or they refuse to accept changes to contractual terms’.

It should be said that just having the reason alone isn’t sufficient when dismissing; the employer must show they’ve acted reasonably when acting.

It’s about being reasonable
An employment tribunal will look at several factors when determining if a dismissal was fair and reasonable, including whether the employer properly investigated the issues and considered any mitigating circumstances; informed the employee in writing of the issues and the possibility of dismissal; conducted a hearing and gave the employee a chance to respond; allowed the employee to attend any hearings accompanied; informed the employee in writing of the decision to dismiss; and gave the employee a chance to appeal.

In addition to these components of a fair dismissal procedure, a tribunal will consider whether the decision to dismiss fell within the band of reasonable responses. For example, even if the employer does have grounds for dismissal, this doesn’t mean it was reasonable to take this step; would an informal discussion, letter of concern or written warning have been more appropriate in the circumstances?

It should be remembered, as Farmer highlights, ‘that there’s no legal definition of ‘reasonableness’.’

The tribunal will also consider whether the employer had detailed performance and conduct guidelines; whether it was reasonable to expect the employee to understand the consequences of their actions; and whether the employer has applied its thinking reasonably and consistently to similar offenses.

In essence Farmer says ‘it’s important to remember that even if the employer follows a fair dismissal procedure, the employee may have certain characteristics that still renders a dismissal unfair’.

An unfair dismissal
In contrast to the above, ‘a dismissal,’ says Farmer, ‘will be considered unfair if the reason doesn’t fall under the scope of one of the five potentially fair reasons for dismissal outlined above; the employer didn’t follow a fair disciplinary or dismissal process; and/or the decision to dismiss was outside the range of reasonable responses open to the employer’.

This makes it important employers follow the ACAS code of practice on disciplinary and grievance procedures in cases of misconduct or concerns about performance. Farmer warns that an employment tribunal will take this into account when assessing whether an employer has acted reasonably if they don’t.

A similar process is applied to redundancies with there being three fundamental elements to a fair redundancy process. And Farmer outlines them – ‘warning employees of redundancies; the creation of and application of fair and non-discriminatory scoring criteria; and the consulting with employees and exploring suitable alternative employment options’.

She continues: ‘Employers who fail to follow a fair selection or consultation process, may find that the dismissal is deemed unfair. If this is the case an employee with at least two years’ service may be able to submit a claim to a tribunal for unfair dismissal. Such claims must generally be submitted within three months of the date the employee’s employment was terminated.’

Employers also need to be aware that some dismissals or redundancies will be automatically unfair. These include an employee who is pregnant, on maternity or paternity leave, or is exercising any of their statutory rights in relation to this.

But Farmer warns about other protections for employees. These relate to making a protected disclosure, known as whistleblowing; having a concern for health and safety and subsequent refusal to work or perform certain tasks; attempting to assert a statutory employment right; having part-time status; participating in trade union activities, including taking part in industrial action or acting as an employee representative; or making a request to work flexibly. In any of these situations selecting or dismissing an employee would be automatically unfair.

There is some comfort for employers says Farmer: in normal circumstances, employees must have two years’ service to bring a claim for unfair dismissal. However, she notes ‘in cases of an automatically unfair dismissal, the usual time constraints don’t apply. This means if any of the above apply, an individual can usually bring an unfair dismissal claim irrespective of length of service, and regardless of whether an employee has acted reasonably or not’.

As a result, when an automatically unfair dismissal occurs it’ll be almost impossible for an employer to justify or defend the matter which makes it much easier for an employee’s claim to succeed. And as Farmer explains, ‘unlike ordinary unfair dismissal, there’s no maximum compensation limit if the dismissal is automatically unfair, greatly increasing financial risk to employers’.

Dismissals happen. But just because they need to be made doesn’t mean employers need to increase the odds of appearing before an employment tribunal. Very simply, following the law and guidance will markedly reduce the chance of a claim being made.
Adam Bernstein is an independent columnist

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