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.

Some of the most common reasons for dismissal are misconduct, inability to do the job and redundancy.

A dismissal will normally be ‘fair’ provided the employer has given one of the five specified reasons for the dismissal (see below) 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 are entirely different and arise from very different concepts.
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Wrongful dismissal

Wrongful dismissal occurs when the employer terminates the contract of employment, and in doing so breaches the contract. The most common example is terminating a contract without giving the contractual notice period. 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 and benefits due for the notice period. CIPD members can find out more in our Wrongful dismissal law FAQs.
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Unfair dismissal

Employees have additional statutory protection in addition to that given by the law of contract. The main example is the right of an employee not to be unfairly dismissed which introduces a concept of ‘fairness’ into most dismissals.

The law on unfair dismissal is principally contained in the Employment Rights Act 1996 as amended by numerous statutes including the Employment Act 2008 which repealed the statutory disciplinary and dismissal procedures (except in Northern Ireland), and the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011.

The basis of unfair dismissal law is that employees have the right to be treated fairly. In making a claim of unfair dismissal the employee needs to be able to demonstrate that they were dismissed; the employer will then need to show that this dismissal was fair because it was for a specific reason.

To be potentially ‘fair’, a dismissal must be for one of these reasons:

  • capability or qualifications
  • conduct
  • illegality or contravention of a statutory duty
  • some other substantial reason
  • redundancy

Retirement is no longer a potentially fair reason for dismissal.

There are special statutory rules relating to discussions before a potential dismissal which lead to a settlement (or compromise agreement) between the employer and employee.
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As well as falling within one of the five potentially fair reasons for dismissal, an employer must also have acted fairly and reasonably in taking that reason as sufficient for dismissing the employee. This involves following a fair procedure and is more complex than it sounds, and an employment tribunal still has wide discretion on what it considers to be ‘fair’.
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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 sconsider if a more positive approach is likely to be effective.

Matters relating to conduct – where the employee’s conduct is an issue, the level of ‘proof’ that the employee committed an alleged offence is not as high as that required in the criminal courts. However, the employer must be able to demonstrate that it carried out a thorough investigation into the alleged offence. The employer must then be able to show that the investigation led to a reasonable belief that the employee had committed the offence, and that the decision to dismiss was reasonable. Acas has published guidance1 for carrying out investigations, but recommends that anyone appointed as an investigator should be trained in this area.

Matters relating to poor performance – where the employee’s capability is in issue, matters may be beyond the employee’s control. The problems may be a result of inadequate leadership, bad management or defective systems of work and, if so, the employer can put in place appropriate remedies (often involving learning and development).

Many cases of both 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 manager to identify the problem, establish the reasons for under-performance and agree the remedial action to be taken.