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Dismissal is when you end an employee鈥檚 contract. When dismissing staff, you must do it fairly.

There are different types of dismissal:

• fair dismissal
• unfair dismissal
• constructive dismissal
• wrongful dismissal

Fair and unfair dismissal

A dismissal is fair or unfair depending on:

• your reason for it
• how you act during the dismissal process

Constructive dismissal

This is when an employee resigns because you鈥檝e breached their employment contract. This could be a single serious event or a series of less serious events.

An employee could claim constructive dismissal if you:

• cut their wages without agreement
• unlawfully demote them
• allow them to be harassed, bullied or discriminated against
• unfairly increase their workload
• change the location of their workplace at short notice
• make them work in dangerous conditions

A constructive dismissal might lead to a claim for wrongful dismissal.

Wrongful dismissal

This is where you break the terms of an employee鈥檚 contract in the dismissal process, for example dismissing someone without giving them proper notice.

Wrongful dismissal is not the same as unfair dismissal.

If an employee thinks you鈥檝e dismissed them unfairly, constructively or wrongfully, they might take you to an employment tribunal.

You must have a valid reason for dismissing an employee. Valid reasons include:

• their capability or conduct
• making them redundant
• something that prevents them from legally being able to do their job, for example a driver losing their driving licence

There could be other fair reasons too - these are sometimes called 鈥榦ther substantial reasons鈥�.

Acting reasonably

Even if you have a fair reason, the dismissal is only fair if you also act reasonably during the dismissal and disciplinary process.

There鈥檚 no legal definition of 鈥榬easonableness鈥�, but if you鈥檙e taken to an employment or industrial tribunal they would consider whether you:

• genuinely believed that the reason was fair
• carried out proper investigations where appropriate
• followed the relevant procedures
• told the employee why they were being considered for dismissal and listened to their views (in Northern Ireland, the employer must do this in writing)
• allowed the employee to be accompanied at disciplinary or dismissal hearings
• gave the employee the chance to appeal

Dismissal and disciplinary procedures

You must set out your dismissal and disciplinary rules and procedures in writing - if you do not, a tribunal can order you to pay an employee compensation.

Summary dismissal

This is when you dismiss someone instantly without notice or pay in lieu of notice, usually because of gross misconduct (for example theft, fraud, violence).

Tribunals may rule a summary dismissal as 鈥榩rocedurally unfair鈥� - you can only suspend someone without pay if their contract says you can do this. If it does not, you should suspend the employee on full pay and investigate the circumstances.

If you feel summary dismissal鈥檚 your only choice, you must still follow a fair procedure as you would do for any other disciplinary matter.

Even if you think you鈥檝e dismissed someone fairly, they could still claim unfair dismissal against you if they think that:

• the reason you gave for the dismissal was not the real one
• the reason was unfair
• you acted unreasonably, for example by failing to give them plenty of warning about their dismissal

Automatically unfair reasons for dismissal

Even if you鈥檝e acted reasonably, some reasons for dismissal are classed automatically unfair. These are to do with the following areas:

• pregnancy, including all reasons relating to maternity
• family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants
• acting as an employee representative
• acting as a trade union representative
• acting as an occupational pension scheme trustee
• joining or not joining a trade union
• being a part-time or fixed-term employee
• pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage
• reporting certain types of wrongdoing - this is known as whistleblowing

Industrial action

It鈥檚 automatically unfair to dismiss someone for taking part in official (鈥榣awful鈥�) industrial action:

• in the 12-week period from the day the industrial action starts
• if the action lasts longer than 12 weeks and you have not taken reasonable steps to resolve the dispute

If you 鈥榣ock out鈥� employees taking industrial action, the days of the lock-out are not included in the calculation of the 12-week protected period.

A lock-out is where you prevent employees from getting to their workplace, for example by locking the doors.

Disability

If a disabled employee cannot do their job because there are no reasonable adjustments that can be made, it may be fair for you to dismiss them.

Political beliefs and groups

It is not automatically unfair to dismiss someone because of their political beliefs or political groups they belong to, but a tribunal might find this unfair.

Penalties for unfair dismissals

If a tribunal finds that an employee has been unfairly dismissed, you might be ordered to:

• reinstate them (give them their job back)
• re-engage them (re-employ them in a different job)

You might also have to pay compensation, which depends on the employee鈥檚:

• age
• gross weekly pay
• length of service

You might have to pay extra compensation if you do not follow a tribunal鈥檚 order to reinstate someone.

There鈥檚 a limit on the amount a tribunal can award for unfair dismissal, apart from in cases relating to:

• health and safety (for example where you unfairly dismiss someone for taking action on health and safety grounds)
• whistleblowing

Employees can only claim unfair dismissal if they鈥檝e worked for a qualifying period - unless they鈥檙e claiming for an automatically unfair reason.

Who cannot claim unfair dismissal

The right to complain to a tribunal about unfair dismissal is not available to:

• self-employed people
• independent contractors
• members of the armed forces
• employees who have reached a settlement with their employer through Acas (Advisory, Conciliation and Arbitration Service) or the Labour Relations Agency (LRA) in Northern Ireland
• employees who have reached a settlement with their employer through a after taking legal advice
• employees employed under an illegal contract, for example a barman under the age of 18
• employees covered by a dismissal procedure agreement that鈥檚 been legally exempted from the unfair dismissal rules
• employees taking part in unofficial industrial action (unless the dismissal is for an automatically unfair reason)
• police officers (unless the dismissal relates to health and safety or reporting certain types of wrongdoing - this is known as whistleblowing)
• those working on a fishing vessel and paid by a share in the profits or gross earnings of the vessel

You can dismiss an employee if:

• they鈥檙e incapable of doing their job to the required standard
• they鈥檙e capable, but unwilling to do their job properly
• they鈥檝e committed some form of misconduct

If you want to dismiss someone, there鈥檚 no specific process you must go through by law - as long as you do it fairly.

If a capability issue is linked to someone鈥檚 health, you should try as many ways as possible to help them do their job before dismissing them.

Disciplinary procedures

You should include examples of what you consider to be misconduct in your disciplinary rules.

Different disciplinary procedures are appropriate for different circumstances.

Misconduct

Misconduct can include things like persistent lateness or unauthorised absence from work.

To make sure the dismissal is fair when misconduct is not 鈥榮erious鈥� or 鈥榞ross鈥�:

1. Arrange a meeting with the employee, telling them the reason for it. At the meeting, give them a chance to explain and issue a first written warning if you鈥檙e not satisfied with their reasons. In the warning, tell them how you expect them to improve and over what period - warn them that if they do not improve enough, you鈥檒l give them a final written warning.

2. Hold a second meeting if their performance or behaviour has not improved enough by the deadline - give them a chance to explain and issue a final written warning if you鈥檙e not satisfied with their reasons. Revise the action plan with timescales for improvement and warn them that you鈥檒l consider dismissal if there鈥檚 no improvement.

3. Hold a third meeting if their performance or behaviour is still not up to standard by these new deadlines. Warn them that dismissal is now possible. After the meeting - or appeal if there is one - decide whether to give the employee a further chance to improve, or dismiss them. You must tell the employee of your final decision, whatever it is.

Serious misconduct

You can issue a single 鈥榝irst and final鈥� written warning if the misconduct or underperformance is serious enough. Explain that not improving could lead to dismissal. 鈥楽erious enough鈥� includes if it鈥檚 likely to or has caused serious harm to the organisation itself.

Gross misconduct

Gross misconduct can include things like theft, physical violence, gross negligence or serious insubordination.

With gross misconduct, you can dismiss the employee immediately as long as you follow a fair procedure. You should investigate the incident and give the employee a chance to respond before deciding to dismiss them.

One-off incidents

An informal discussion may be enough to resolve the issue if the misconduct or underperformance was a one-off and the employee has a good disciplinary record.

Sometimes an employee may have to stop working because of long-term ill health. They may resign, or you may have to consider dismissing them.

Considering dismissing an employee

Dismissal is a last resort and you should consider as many ways as possible to help the employee back to work, including:

• getting a medical report from their GP with the employee鈥檚 permission - they have the right to see the report before you do
• arranging an occupational health assessment
• work out whether or not they are classed as disabled under the Equality Act 2010 and make any reasonable adjustments to help them do their job

If the employee cannot do their job because there are no reasonable adjustments that can be made, it may be fair for you to dismiss them, even if they鈥檙e disabled.

During the dismissal procedure, make sure you act fairly and reasonably. You must treat the employee with sensitivity.

Your written rules and procedures should follow the advice given in the code of practice.

In England, Scotland and Wales

Follow the advice set in the Acas (Advisory, Conciliation and Arbitration Service) .

In Northern Ireland

Follow the advice set in the Labour Relations Agency (LRA) Code of Practice:

Check if you need to deduct tax from employee payments

If you dismiss an employee, you may give them a 鈥榯ermination payment鈥�. This could include:

• holiday pay
• unpaid wages
• company benefits, for example bonuses

What you鈥檒l deduct tax and National Insurance on depends on what鈥檚 included in the employee鈥檚 termination payment.