10 Costly Mistakes Employers Make When Dismissing Employees
Matthew Grant
A big part of my job is helping employees to bring unfair dismissal claims, or assisting employers in defending these claims. It’s often surprising how many mistakes employers can make, either through acting too rashly, or just not being up to speed on relevant employment law.
Defending an unfair dismissal claim can be costly for employers, not only financially but also in time spent instructing solicitors or preparing to defend the claim. The hidden cost is also the damage to the reputation of their business and low morale amongst their remaining employees. Here are the top 10 mistakes that our firm regularly encounters when dealing with unfair dismissal claims – those in charge of HR, take note!
1. Suspending unnecessarily/without cause or review
It is increasingly common for employers to suspend employees whenever there is a sign of misconduct. Some employees become concerned that they have been suspended simply to put pressure on them, or to make their misconduct appear more serious than it is. Whilst in some cases this might well be true, the law is quite clear that suspensions should only be considered where there is likely to be a finding of serious misconduct or negligence and where there is a clear need to keep the employee away from work – for example, to investigate or to limit the damage of misconduct or negligence.
Suspensions, even though the employee will be on full pay, need to be kept under regular review and lifted once no longer needed, to ensure that the actions taken by the employer are regarded by the Employment Tribunal as reasonable.
2. Not carrying out a sufficiently thorough investigation
A common pitfall for an employer is not carrying out a sufficiently thorough investigation. An investigation should be fair and even-handed. It should look not only for evidence that makes the employer sure that their employee has not performed or conducted themselves as expected, but also look for evidence which points away from ‘fault’.
The investigation should look at the full circumstances in which the employee has acted. It should be fair, balanced and seek the truth. An investigation which is biased or selective is likely to lead to a finding of unfair dismissal.
3. In performance cases – dismissing in the absence of a capability procedure
Employers dismissing for poor performance need to show that they have highlighted their employee’s shortcomings, made clear what is expected of them, and allowed them sufficient opportunity and the required support to improve. Employers should ideally put in place a clear capability procedure which addresses how they present capability issues to their staff, what improvement is expected, and what the employer will do to assist them to reach the required standard. A failure to set realistic targets or give the employee a fair chance could render a dismissal unfair and allow the employee to claim greater compensation.
4. In performance cases – dismissing in the absence of adequate evidence of poor performance
Employers often believe that their employee is poorly performing but do not necessarily have enough evidence to show this. This could lead to an employee suggesting there is an ulterior motive for their dismissal – such as whistleblowing or discrimination. It is important that employers have enough evidence to support their underlying belief. This is yet another reason for ensuring a thorough investigation.
5. In conduct cases – dismissing despite the lack of clear policies
Employers wishing to dismiss an employee for misconduct should ideally have a system of clear rules in place and be able to show that the employee was made aware of those rules and understood them. This could be in the form of a standalone disciplinary policy or contained within a Company Handbook. This will make it easier for employers to show that what the employee did was wrong, that they knew it was wrong, and that they disobeyed instructions.
6. Not taking disability into account
If an employer is taking disciplinary action over performance or conduct, they need to consider why the situation has arisen. If the employee is disabled there is a possibility that the reason for their under-performance or misconduct is connected in some way to their disability or to the disability of someone they are caring for. In these situations, reasonable adjustments should be made in making any decision to discipline or dismiss as this could become an inadvertent act of disability discrimination.
Even if an employee’s disability does not explain their conduct or performance, it may be necessary to take this into account when following the disciplinary procedure; for example, by allowing additional time in the process, by scheduling breaks during meetings, or by extending the right to be accompanied. A failure to make reasonable adjustments could expose an employer to additional claims of disability discrimination.
7. Offering the employee a chance to resign
Many employers consider that it is proper to allow their employee a chance to ‘jump before they are pushed’. While in some cases this leniency does not lead to a Tribunal claim, it can just as easily backfire. If the employee is left to feel that they had no choice but to resign, a forced resignation could result in a claim for unfair dismissal and/or constructive unfair dismissal as a breach of trust and confidence had taken place. In these circumstances it would be more difficult for the employer to show that a fair process had been followed. Employers who are tempted to invite their employee to resign, either as an act of kindness or to save the time of going through a fair capability or disciplinary process, need to act with extreme care.
8. Offering a Settlement Agreement
It is a common misconception that employers could offer their employee what was formerly known as a Compromise Agreement and is now called a Settlement Agreement in the course of a grievance, capability or disciplinary process. However, offers of Compromise Agreements and Settlement Agreements will only be inadmissible in cases where the employee goes on to bring an ordinary unfair dismissal claim. If an employee raises issues such as discrimination or issues which would result in an automatic unfair dismissal claim or breach of contract claim being brought, then the employer would not be able to rely on these protected conversations.
Offers of Settlement Agreements are therefore best reserved until after the employer has instigated the disciplinary or capability process so that there is a paper trail which shows this is an ordinary dismissal situation.
9. Redundancy selection
When faced with the unpleasant situation of reducing headcount, many employers struggle to be objective and fair when identifying who should be made redundant. An employer might have a good idea who is their weakest performing employee, but unless their dismissal results from properly drawn-up criteria – which the employer consults about properly – the fairness of their selection and any subsequent dismissal could be undermined. Regardless of the end result, employers must be seen to do things fairly and objectively and following a fair redundancy procedure.
10. Solicitors chairing disciplinary meetings
Some employers make the mistake of instructing solicitors to chair disciplinary meetings and appeals. Not only is this expensive and unusual, but it can lead to the solicitor’s ethical duties becoming compromised as they are torn between carrying-out an “independent” process, serving the best interests of their client and acting with integrity as they are an Officer of the Court. In a case I dealt with recently, the Judge was extremely critical of a solicitor who had taken this role, particularly when they could not produce a written record of a conversation they had with their client which was relevant to the decision-making process. A finding of unfair dismissal was made by the Judge.
Even if the employer is the sole owner or director (and even where there is a concurrent grievance by the employee against this owner/director) it is safer for this person to be the decision maker. An alternative would be to bring in an HR Consultant to chair the meeting so that a fair process is followed. And to guide the decision maker in making a fair decision by advising on employment law and practice. The owner/director would also have to hear the appeal if a company secretary or other senior person was not available.
These are just 10 of the potential pitfalls that employers can encounter when dismissing employees. To make sure you don’t end up defending costly claims against you, always take the time to properly consider the situation, and in difficult situations seek expert guidance from a specialist employment lawyer. Our team are here to help – give us a call on 01273 609911 or email info@ms-solicitors.co.uk.
