CIPD - Dismissal

Employment law

Revised April 2009

This factsheet gives introductory guidance. It:

explains the key concepts behind wrongful, unfair and constructive dismissal
explores automatically unfair reasons for dismissal and the qualifying conditions for bringing an unfair dismissal claim
gives an overview of permissible reasons for fair dismissal and how fairness is judged
includes the CIPD viewpoint.

Dismissal is a serious matter that needs careful handling.

Before taking any action, managers should first establish the facts. And before considering dismissal, managers should also see if a more positive approach is likely to be effective. Poor performance may be a result of inadequate leadership, bad management or defective systems of work and, if so, remedies (often involving learning and development) can be put in place. Many cases of misconduct and poor performance can be dealt with by informal advice, coaching and counselling. Improvements can often be achieved through continuing feedback and joint discussion between individuals and their managers to identify the problem, establish the reasons for under-performance and agree the action to be taken. See our factsheet on managing performance for more information.

Go to our Performance management factsheet

If all this fails, disciplinary action – possibly including dismissal - may need to be taken. See our factsheet on discipline at work.

Go to our Discipline and grievances at work factsheet

Dismissal of an employee occurs when:

the employer terminates the contract, either with or without giving notice
a fixed term contract ends and is not renewed
the employee leaves, with or without giving notice, in circumstances in which they are entitled to do so because of the employer’s conduct.

According to Acas¹, among the commonest reasons for dismissal are misconduct, inability to do the job and redundancy.

A dismissal will normally be ‘fair’ provided the employer has a good reason for the dismissal and has acted ‘reasonably’ in carrying it out. When somebody is dismissed, they often say they will claim 'unfair' or 'wrongful' dismissal. The terms are often used interchangeably, particularly in media reports, but in fact they arise from very different concepts.

Wrongful dismissal

Wrongful dismissal is a long-standing concept which is basically a claim for breach of contract. All employment contracts can be ended by either the employer or the employee giving notice. The period of notice is a matter for agreement between the parties, but is subject to minimum periods prescribed by law. Wrongful dismissal claims will generally be for the payment due for the notice period.

CIPD members can find out more about Wrongful dismissal in our Employment Law at Work FAQs.

Go to our Wrongful dismissal FAQs

Unfair dismissal

Over a relatively recent period, successive governments have given employees additional protection to that given by the law of contract. One of the earliest protections, dating from 1971, is the right of an employee not to be unfairly dismissed - it introduces a concept of 'fairness' into most dismissals. Understanding this important concept is key to understanding the difference between unfair dismissal and wrongful dismissal.

The law on unfair dismissal is principally contained in:

The Employment Rights Act 1996 (as amended).

Recent important amendments to the Employment Rights Act have been made as follows:

The Employment Equality (Age) Regulations 2006 - introduced procedures relating to employee retirement.
The Employment Act 2008 - repealing the statutory disciplinary and dismissal procedures. (This Act does not apply in Northern Ireland.)

The basis of unfair dismissal law is that employees have the right not to be unfairly dismissed. All that the employee needs to prove at an employment tribunal is that they have been dismissed: the employer must then prove that the dismissal was fair.

The key points are:

Does the employee qualify to bring a claim?
Is the dismissal automatically unfair?
Was the dismissal for one of six 'potentially fair' reasons for dismissal?
Did the employer act fairly and reasonably in treating that reason as sufficient reason to dismiss the employee?
Did the employer follow the statutory disciplinary and dismissal procedure when dismissing the employee?

Does the employee qualify to bring an unfair dismissal claim?

To balance the interests of employers and employees, there is a short period at the start of employment when employees do not enjoy protection from unfair dismissal: this is known as the 'qualifying period' and it is currently one year.

There are exceptions to the requirement for one year’s service in order to bring a claim: for example, dismissals for:

trade union membership or activities
pregnancy or childbirth
taking maternity, adoption, paternity or parental leave
asserting a statutory right
claiming the National Minimum Wage
asserting rights under the Working Time Regulations.

These are also examples of automatically unfair reasons for dismissal.

Is the dismissal automatically unfair?

The next step is to check whether the employee’s dismissal was automatically unfair under the law. Examples of automatically unfair reasons for dismissal include those listed above, although there are others. CIPD members can see more detail in our Unfair dismissal FAQs.

Go to our Unfair dismissal FAQs

The six potentially fair reasons for dismissal

An employer must first prove the dismissal was for one of these reasons:

capability or qualifications
conduct
illegality or contravention of a statutory duty
some other substantial reason
redundancy – see our factsheet for more information on this topic. CIPD members can also see our Redundancy FAQs for more detail.
- Go to our Redundancy factsheet
- Go to our Redundancy FAQs
retirement – though this differs from the other potentially fair reasons for dismissal, regarding both the procedure and how 'fairness' is decided.

'Fairness'

After showing that the dismissal was for one of the six potentially fair reasons given, an employer must show that they acted fairly and reasonably in taking that reason as sufficient for dismissing the employee. This is more complex than it sounds, although it should always be borne in mind that an employment tribunal still has wide discretion on what it considers 'fair'.

Acas, the independent conciliation service, produces guidance in their Code of Practice² on dealing with disciplinary and dismissal and grievance matters. Although employment tribunals need only to have regard to the Acas Code and it does not have the force of law, in practice employers must follow the Code, otherwise :

they will have difficulty convincing a tribunal that they acted fairly, and
failure to follow the revised Acas Code may result in an order to pay compensation increased or decreased by 25% depending on whether the employer or employee failed to comply (this applied from 6 April 2009 when the provisions of the Employment Act 2008 came into force). In addition, an employer must follow any contractual or customary disciplinary process or procedure for a dismissal to be 'fair'.

The statutory disciplinary, dismissal and grievance procedures

In the process of dismissing an employee between October 2004 and 6 April 2009 an employer must have followed the statutory procedures. See our factsheet on workplace discipline and grievances for more information on these procedures and their reform. CIPD members can see our Discipline and grievance procedures FAQ for more detail.

Retirement dismissals

The Employment Equality (Age) Regulations 2006 introduced the concept of a 'planned retirement' into unfair dismissal law. Although the words 'planned retirement' do not appear in the final version of the legislation, it is a helpful concept in understanding how a dismissal for retirement can be considered 'fair'.

The Government has taken advantage of European law allowing for age-related retirement to take place without falling foul of age discrimination law. For more information, see our Age and employment factsheet. CIPD members can see more detail in our Age discrimination and retirement FAQ.

Constructive dismissal

A 'constructive dismissal' occurs when an employee leaves a job of their own accord, but subsequently alleges that the employer’s behaviour forced them out.

Constructive dismissal would need to be brought as an unfair or wrongful dismissal claim. The employee needs to prove that the employer’s behaviour entitled them to end the contract of employment without notice.

CIPD viewpoint

Dismissing employees is sometimes necessary. However, it can be costly and can also damage the business. It should be considered only when other options have failed. Where dismissals cannot be avoided, compliance with law and codes of practice is essential. There are also significant business benefits for employers, in terms of the response of other employees and the wider community, in being seen to handle dismissals fairly and responsibly.

Useful contacts

Acas

Business Link

Department for Business, Enterprise and Regulatory
Reform (BERR)

References

ACAS. (2006) Employing people: a handbook for small firms [online]. Available at: http://www.acas.org.uk/index.aspx?articleid=933
ACAS. (2004) Disciplinary and grievance procedures. Code of Practice 1. London: Acas. Available at:
http://www.acas.org.uk/CHttpHandler.ashx?id=1047

Dismissal