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Termination Frustration: Common Questions When Dismissing Employees

There are certain questions that people working in particular professions will always get asked.  When someone reveals they are a teacher, the response is almost universally “primary or secondary?”; tell people you are a physiotherapist, and they are suddenly keen to discuss their bad back. It is the same for employment solicitors. When employers approach us to discuss a problem employee, a few questions regularly pop up. Below are the answers to some of the most common questions asked about dismissing employees.  

 

What happens if I just dismiss the employee?

If the employee has less than two complete years’ service, probably nothing. However, if the dismissal is for a discriminatory reason then you may face a discrimination claim regardless of the employee’s length of service. Dismissing an employee with two years’ service or more (a “long-term employee”) without a fair reason for dismissal and without following a fair process will result in an unfair dismissal.  The employee may then bring a claim against you in the Employment Tribunal, subject to first going through the Early Conciliation process with Acas.

You should generally follow the “three strikes” principle; the provision of two written warnings (a first warning and a final warning) before dismissal. In some cases it may be appropriate to skip one or both warnings, depending on the circumstances. In cases of self-evident gross misconduct, you may be able to dismiss the employee immediately without notice. Otherwise any dismissal should only follow a fair process of investigation and hearings.

 

Why can I not just give a long-term employee notice or a payment in lieu of notice?

Providing notice or a payment in lieu of notice (PILON) does not make the dismissal fair. A fair process and a fair reason for dismissal are both required. Failure to provide

the correct notice can result in a claim for wrongful dismissal, although this can usually be remedied by simply providing a PILON. However, unless the contract specifically permits the provision of a PILON, it would be a breach of contract and any clauses in the contract that you want to survive termination (such as restrictive covenants) will become unenforceable.

 

How long will it take to dismiss the employee through a fair disciplinary or performance management process?

The time required will depend on the issue. For disciplinary matters, it may be necessary to suspend the employee and/or conduct an investigation to gather the necessary evidence. Employees should be given sufficient warning of a disciplinary hearing to allow them to prepare. If the employee is then given a first or final warning, this should be disregarded for disciplinary purposes after 6-12 months. If there is no further disciplinary issue within this time then the employee begins the “three strikes” process again.  Employees may also appeal against any disciplinary sanctions, in which case a further hearing will be required.

For performance management issues, the employee must be given sufficient time to show improvement in their performance following receipt of warnings. The disciplinary meeting should include a discussion regarding the employee’s targets and relevant timeframe for improvement. Targets must be reasonable and achievable in the timeframe.   Again the employee may appeal against the decision.

Informal warnings will not be sufficient as the first “strike”, so formal processes should begin as soon as problems persist. Whilst this can create tension, it offers both a route to improvement in the employee’s conduct or performance and, if there is no such improvement, a fair dismissal.

 

Can I just make them redundant?                                           

That depends. If the role they are currently in can disappear altogether, then potentially you can. However, if the role is to continue and you will be replacing the employee after their dismissal, this is not a redundancy situation. If their role could disappear but they are performing the same or a similar role to any colleagues, the individual should not be the only one placed at risk of redundancy and selecting them for dismissal from this pool of employees would need to be through a fair selection process. The employee would need to be appropriately consulted regarding the potential redundancy and offered the option to apply for any alternative vacancies in the business. They would also have to receive statutory redundancy pay (SRP) in addition to their notice or payment in lieu of notice.  The level of SRP payable depends on their salary, length of service and age at termination.

 

Can I stop the dismissed employee contacting clients or taking confidential information?

If the employee’s contract includes restrictions regarding confidential information or contacting clients, these can survive termination as long as there has been no breach of contract. If garden leave is permitted under the contract, this can be a useful device as they continue to owe the usual duties of an employee but are not required to attend the workplace.

 

Is there any way to simply agree their exit with them?

Yes. You can have a without prejudice conversation with an employee regarding an offer to terminate their employment under a settlement agreement. The employee will waive their rights to bring any claims against the employer in return for a settlement payment. A sum paid under a settlement agreement can be paid tax free up to £30,000 (inclusive of any SRP), although this should not include any contractual entitlements that the employee would ordinarily be entitled to such as a contractual PILON or accrued untaken holiday. As a settlement agreement is not binding unless the employee has taken legal advice, it is common practice for the employer to contribute a small sum to the employee’s legal fees.

 

Matthew Cranton - Employment & Immigration

This article was first published on 3 June 2016 as part of our Employment Law Update series. Register above to receive our updates as soon as they are published, directly to your inbox! 

This article is offered for general informational purposes only, and does not constitute legal advice. The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the views or opinions of Solomon Taylor & Shaw.