Dismissals - the cost of getting it wrong, and the exception to the rule

Let’s dive into a crucial HR topic and one I often get asked advice about: dismissing an employee.

Employees who have been employed for two or more years are protected against unfair dismissal, and after that point there are FIVE potentially fair reasons for a dismissal.

Redundancy

Misconduct

Capability

Some Other Substantial Reason

Statutory Illegality

As well as having a fair reason for dismissal, the dismissal process has to be conducted in a specific way that is reasonable, and as such there are a set of guidelines that employers must follow in order for the process to be fair.

If either the reason for dismissal or the process of the dismissal is not carried out fairly, then there is a risk of an unfair dismissal claim being taken against the employer.

The average award in the UK for unfair dismissal in 2023 was £12,000, and while they are subject to a statutory cap, there are exceptions and one individual was awarded £184,200. (There are certain cases where the statutory cap does not apply!)

The Exception To The Rule ?

An employment tribunal case of Polkey v AE Dayton Services from the 1980s, set an interesting legal precedent that I always recommend every business owner should know the basics of and understand for reference.

In Polkey, the court found that a dismissal could be deemed fair even if the formal procedure wasn’t followed, (provided the outcome would have been the same regardless). This means that if you can clearly demonstrate that an employee would have been dismissed anyway, tribunals might rule in your favour even if the proper steps weren’t taken to get to the dismissal.

Fair processes are always essential, but there are exceptions if and where the outcome would remain unchanged.

So, what can we learn from this?

Always ensure that you have genuine reason for a dismissal, and that this reason is well-documented. Even if a formal procedure seems like a formality, it’s wise to follow it unless it’s clear that no other outcome is possible. Remember, most dismissals should still follow a fair and thorough procedure, ACAS has a code on the basics of this.

But in some cases where the Polkey principle applies, knowing the law can save you time and resources.

Always tread carefully and consult with a HR professional (like me 🙋‍♀️) before making any dismissal, to ensure you’re making informed decisions that won’t cost you ££’s at the tribunal if you get it wrong.

It’s never easy as a business owner to make decisions that impact people’s lives, such as dismissals. But it’s a part of running a business, and handling it correctly is crucial.

Happy managing! 😊