4 things to consider when dismissing permanent employees

As an employer, dismissing permanent employees is not an easy or enjoyable process. Here are 4 things to consider.

Length of relationship

When an employer terminates a contract of employment of an employee who has two or more continuous years of service, they must show that they have a fair reason for dismissal and have followed a fair process to prevent a claim of unfair dismissal. An employee who does not have two years of service, but whose notice would take them over two years, is likely to be protected. Caution should be taken when terminating their employment.

Employees who do not have two years of continuous service cannot bring a claim for unfair dismissal but may have grounds for wrongful dismissal where their termination breaches the terms of their contract of employment, for example, the correct notice period is not given.

What are employees entitled to?

When terminating a contract of employment, employers must refer to the employees’ contract of employment and ensure that all contractual obligations are met. If there is no contract of employment in place, employees have a statutory entitlement to:

• Notice period: One week for those employed over one month but under two years. One week for every continuous year of employment for those employed for 2 years or more, to a maximum of 12 weeks unless the employee is dismissed on grounds of gross misconduct.
• Written reasons for dismissal: an ex-employee who was employed for two years or more must receive written reasons for dismissal, if requested, within 14 days of the request.
• Payment in lieu of annual leave: Employees accrue their annual leave entitlement through an employer’s annual leave year. Employees may be entitled to payment in lieu of any leave they have accrued but have not used at the date their employment terminates. However, employers may be able to insist on employees taking their outstanding leave during their notice.

Reason for dismissal

An employee who has more than two years of continuous service and is dismissed would be entitled to claim unfair dismissal. Employers must ensure that the dismissal is fair. Potentially fair reasons for dismissal may be:

• Capability/Qualification: This could be a single act of misconduct or a series of less serious acts.
• Conduct: This could be poor performance, ill-health and formal qualifications.
• Redundancy: This could be workplace closure, business closure, or reduced need for employees to do a particular kind of work.
• To continue the employment, would be a contravention of a duty or restriction imposed by or under an enactment i.e. no longer having the right to legally work.
• Some other substantial reason.

Steps to reduce risk

• Keep records of any emails, letters, conversations or meetings relating to the dismissal.
• Ensure a fair procedure is followed. An employee that is “bullied” out of their employment, may have a claim for constructive dismissal.
• Inform the employee of the reason for their dismissal.
• Where appropriate, consider a settlement agreement to limit the risk of a potential employment tribunal claim.

Always follow up conversations in writing. Written evidence is better than verbal.