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How to avoid an unfair dismissal claim

In the first in a series of articles on employment law issues, Debbie Sadler looks at how practices can avoid any legal claims when dismissing an employee.

The rules on unfair dismissal are changing, with the Government looking to extend the time employees must work to make a claim and the rules regarding age to be adjusted later this year.

It is important that GP practices are aware of the rules regarding this area, and incorporate them into their disciplinary procedures for practice staff.

The following article gives a brief summary of the rules in this complex area, where claims can stretch to tens of thousands of pounds.

What is unfair dismissal?

Unfair dismissal occurs when an employer dismisses an employee for a reason which does not fall within the potentially fair reasons set out in the Employment Rights Act 1996 or fails to follow a fair and reasonable procedure.

There are currently six potentially fair reasons for employers: capability, conduct, redundancy, illegality, retirement or some other substantial reason. Retirement is due to be repealed as a potentially fair reason later this year.

In 2009/2010 almost 400,000 claims were brought in the employment tribunal of which nearly 60,000 were for unfair dismissal. The average award for an unfair dismissal claim during that period was just over £9,000.

What length of service is needed to bring a claim for unfair dismissal?

Generally speaking, an employee must have one year’s continuous service to bring a claim for unfair dismissal although there are exceptions to this. For example, if an employee is dismissed because they have ‘blown the whistle’, they do not need to have one year’s service to bring a claim.

The Government is currently considering increasing the requisite length of service to two years.

What is a ‘fair and reasonable’ procedure?

This will depend on the reason for the dismissal and advice should be sought before any dismissal is contemplated.

For example, if an employee is dismissed for a conduct-related reason (e.g. gross misconduct), the employer must show that it has carried out a thorough investigation, that is has provided copies of any evidence to the employee and has given reasonable notice of the disciplinary hearing. The employee must be given every opportunity to state their case and a decision should only be made once the employer has objectively considered all the evidence. Following the hearing, the employee should be notified promptly of the decision and given the right to appeal.

In addition, the three stages of the disciplinary process (investigation, disciplinary hearing and appeal) should be dealt with by different people of increasing seniority and disciplinary sanctions should be applied consistently and fairly.

By contrast, employees who are under-performing should be encouraged to improve their performance though dialogue and support before dismissal is contemplated. This requires a series of meetings over a period of time to explain why the employee’s performance is unsatisfactory, and to discuss ways of improving performance; this could be through training for example. Only if employees continue to miss their targets should the employer resort to formal disciplinary action and ultimately dismissal.

Redundancy dismissals require employers to identify the pool of employees from which redundancies will be made and to determine objective selection criteria to grade employees and identify which will be put at risk of redundancy. Employees must be consulted about ways of avoiding redundancies, by being offered alternative roles or job sharing, for example, and any suggestions made should be considered. Only once employees have been fully consulted should the final decision be made.

Please note separate rules apply where the employer is considering making 20 or more people redundant.

What role does the Acas Code of Practice play?

The Acas Code of Practice provides guidance for employers and employees when handling disciplinary or grievance issues in the workplace.

Although the Acas Code does not have statutory effect, tribunals can take it into account when considering a claim for unfair dismissal and a failure by either party to follow the Code can lead to an increase or decrease in any damages awarded by up to 25%.

What are the potential remedies if an employee is successful?

If an employee is successful in their claim for unfair dismissal, the tribunal can order any of the following:

1. Reinstatement – this involves the employee returning to the same job with the same pay, benefits and security. Tribunals are aware that this will often not be appropriate due to the breakdown in the relationship of the parties as a consequence of the dismissal.

2. Re-engagement – this involves the employee returning to the same employer but in a different role. Again, this will not always be appropriate.

3. Compensation – (this is the most commonly sought outcome) – consists of two elements:

i) The basic award is based on length of service, the age of the employee and their gross weekly pay (subject to a maximum cap which is currently £400 per week)

ii) The compensatory award is aimed at compensating the employee for other losses suffered as a result of the unfair dismissal, such as immediate and future loss of earnings or loss of pension rights. It is subject to a cap which is currently £68,400

What do changes to the default retirement age mean for retirement dismissals?

It will not be possible to issue forced retirement notices after 6 April 2011 following the abolition of the default retirement age. Thereafter, employers will no longer be able to lawfully dismiss employees by reason of ‘retirement’.

Compulsory retirement on account of age could lead to claims for unfair dismissal and age discrimination. It is therefore important that advice is sought before age-related dismissals are made.

Debbie Sadler is a senior employment solicitor in Blake Lapthorn’s Health and Care sector group

Debbie Sadler is a senior employment solicitor in Blake Lapthorn’s Health and Care sector group