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Employment law guide


Unless an employee is contracted to work for only a specific fixed period or his contract provides for circumstances that automatically end it, his employment can usually only be terminated by either him or his employer giving a period of notice. If the employer ends the contract this is a dismissal. However a dismissal will also occur if an employer simply fails to renew a contract for a fixed period when that period comes to an end.

There can also be a constructive dismissal if an employee resigns in circumstances where he is entitled to treat the contract as brought to an end by a fundamental breach of contract on the part of the employer. A common example of this kind of dismissal is where the trust and confidence between employer and employee is destroyed. Abusive or discriminatory behaviour by an employer towards an employee, a serious unilateral variation of contractual terms by the employer or conduct intended to provoke the employee’s resignation may well cause a constructive dismissal.

Unfair dismissal

Generally an employee who has completed more than two continuous year’s employment is protected from unfair dismissal.

In order for a dismissal to be fair the reason for the dismissal must be one of these potentially fair reasons:

In all cases the employer’s decision to dismiss must satisfy a test of fairness. If the employer has not followed a fair procedure in making the decision to dismiss an employee the dismissal will usually be ruled to be unfair.

A Tribunal will look at all the circumstances of a dismissal in order to decide whether the decision to dismiss was a reasonable response to the circumstances and the facts known to the employer at the time.

If the claimant is found to be unfairly dismissed the Tribunal will award compensation made up of two components.

The basic award is calculated in the same way as a statutory redundancy payment multiplying a week’s pay by the number of years worked adjusted according to the claimant’s age.

Over and above the basic award the Tribunal may award compensation to meet the claimant’s financial losses caused by the dismissal.

The maximum award of compensation is fixed by law. From 2013 a cap was imposed to limit compensation awards to a year’s pay or the statutory limit, whichever is the lower.

As well as awarding compensation a Tribunal may also order the employer to give the employee his job back or re-engage him in a similar job. The number of such orders made is very small.

Tribunals have the power to adjust awards. An employer who fails to comply with a reinstatement or re-engagement order may be ordered to pay additional compensation. An employee who is found to have contributed to his dismissal may have his compensation reduced.

Tribunals also have powers to order one party or the other to pay the other’s costs.

Automatic unfair dismissal

Some dismissals are classed as automatically unfair. These are generally where the dismissal is for asserting a statutory right; for a reason which is to do with pregnancy or maternity leave or the other family-friendly rights, pay and working hours, including the National Minimum Wage, trade union membership, whistle blowing, being a part-time or fixed-term employee, or for a health and safety-related reason.

Most automatically unfair reasons for dismissal do not require a qualifying period to make a claim for unfair dismissal so they count from day one of employment. Some, such as a dismissal related to a TUPE transfer or because of a spent criminal conviction, do require the employee to have completed two years of continuous employment to make an employment tribunal claim.

The effect of a reason being an automatic unfair dismissal is that if the employee establishes to the Tribunal that they were dismissed for such a reason the employer cannot then establish that the dismissal was fair.

Wrongful dismissal

This is an entirely different concept to unfair dismissal. Every employee is entitled to reasonable notice of the termination of their employment unless employed on a fixed term contract. This is a common law concept independent of the statutory rights not to be unfairly dismissed. Most contracts of employment specify the notice either party must give the other. In the absence of such agreement the Employment Rights Act 1996 provides that where an employee has been employed for more than a month, the employer must give him at least the statutory minimum period of notice which is one week. After two completed years of continuous employment, the notice entitlement rises to one week for every completed year of employment up to a maximum of 12 weeks notice.

An employee only has to give his employer a week’s notice, after a month of employment, irrespective of how long he is employed.

An employee dismissed without notice may be able to sue his former employer for wrongful dismissal and claim damages equivalent to what he has lost as a result.

However, an employer may dismiss without notice where the employee is guilty of gross misconduct, although what exactly constitutes ‘gross misconduct’ is not clearly defined, so it is a good idea for employers to seek legal advice in such situations.

Retirement dismissals

Retirement cannot be a potentially fair reason for dismissal unless it can be objectively justified.