Recruiting, familiarising, and training an employee in the principles and practices of a particular employer is costly. The dismissal of an employee means that such costs are written off - and may well be incurred again as far as any replacement employee is concerned. However, of far greater concern is that the dismissal might generate an Employment Tribunal case for unfair dismissal and potential liability of £55,000 (February 2004) plus the costs of the case.

It should be possible, to convert the unacceptable behaviour of many employees into that which is acceptable. However, where it is not, then any decision to dismiss needs to be considered very carefully, not least since any decision found to be unfair could be very costly to the employer and will also be subject to scrutiny by remaining employees.

A decision to dismiss should therefore only be taken:

a. as a last resort;

b. after calm consideration, and reconsideration, of the events which led to the decision;

c. after checking that the whole process is in accordance with the procedure laid down;

d. after considering that the decision is a reasonable one; and

e. after taking legal advice, if in any doubt.

Legally there are five potentially fair reasons for a dismissal:

1. Conduct. The employee acts in a way that the employer feels is unacceptable or has previously stipulated is unacceptable, or does not act in the way required.

2. CAPABILITY. The employee does not attain and/or maintain the level of expertise or output reasonably expected of him/her.

3. Legal barrier. Where to continue employment would mean a breach of legislation.

4. REDUNDANCY. The job performed by the employee or the job performed by him at that location has disappeared.

5. Some other substantial reason (SOSR). This covers a number of situations, of which possibly the most numerous is that the employee is unable to continue to perform their duties because they have repetitive and/or long-term sickness, whether genuine or not.

If an employee feels he has been dismissed unfairly and he has worked for his employer for at least a full year, within 3 months of the date of dismissal he has the right to lodge a claim with an Employment TRIBUNAL. The employer must answer such a claim and if it is found that the dismissal was unfair, may have to compensate the employee or re-engage or reinstate him.

Except where summary dismissal is warranted, most dismissals tend to follow the exhaustion of the steps in the DISCIPLINE procedure. When considering dismissal as a sanction, ideally the person required to make the decision, who should not have been previously involved, reviews what has gone before to check the decision is fair. Asking the following questions might be appropriate:

Has the exact offence, already the subject of a final warning been committed? If the exact offence has not been replicated it may be unwise to move straight to dismissal.

Are the rules so clear that no misinterpretation is possible? If the rules are ambiguous the employer (that is the person who drafted them) cannot benefit from the ambiguity.

Is there a rule prohibiting the offence and, assuming there is, is it reasonable and did the employee know of it and of any changes to it? Unless it can be shown that an employee is aware of the rule (and any changes), any subsequent tribunal action may be lost.

Was a full and detailed complaint form given to the employee allowing them time to consider their defence? If not, this is almost certainly a breach of the Employment Act 2002.

Were there any extenuating circumstances? If there were, it may be unlikely that dismissal is a reasonable response and the appropriate penalty. For example, an employee with a bad time keeping record might have been given a final warning that if he was to be late in the following four weeks more than once, he would be dismissed. If he were then late twice but the first time it was because his wife had died and the second time because he broke his leg running for the bus, it would be perverse to implement dismissal. It would hardly be likely to be the action of a reasonable employer and granting a further period of probation might be more advisable. (It might also be advisable to stipulate 'late through your own fault' criteria.)

Has the employee admitted the offence and shown remorse? It has been deemed acceptable to apply a lesser penalty to those that have, rather than a person who despite overwhelming evidence continues to protest his innocence.

Is the offence of such seriousness that the warning procedure does not need to be followed? In other words, summary dismissal is reasonable in the circumstances.

Does the Organisation, having investigated the circumstances, honestly and reasonably believe the person to be guilty of the offence? This is particularly relevant to THEFT.

Is dismissal the only or appropriate decision? The punishment must fit the crime. The degree of culpability, the seriousness of the crime, and so on can affect the assessment of what is a reasonable sanction in the circumstances.

Have all the factors relevant to the case been taken into account? If the employer has created a situation where the offence could be said to have followed as a result of that action, dismissal might be judged to be unfair.

Is some other penalty available and applicable - for example, demotion?

Is the position of the employee such that behaviour possibly excusable in a more junior employee is not excusable when committed by them? An employer has the right to expect a higher degree of care and adherence to rules from a manager than shop floor personnel - not least since they must provide an example to others.

Has the stated procedure been followed? Failing to follow a laid down procedure can almost certainly create a procedurally unfair dismissal.

Is the penalty being considered fair and reasonable in all the circumstances?

Are there any precedents for the action and, if so, are there are variations in the facts which allow a reasonable deviation from the action if required?

Circumstances do alter cases but the details must be available to demonstrate this, should the decision be appealed on grounds of failure to follow precedent.

Although demotion can be considered as an alternative to dismissal of a supervisor, unless it is specifically allowed for in the contract, it needs to be effected with the express agreement of the employee.
There are three main aspects to consider the effect on the person, their colleagues and on the person's income and other benefits. Whilst accepting the point that employers cannot assume that the loss of face would be too great for the employee to consider demotion, the practicalities of the situation would seem to indicate that, whenever possible, not only should there be a demotion but also a transfer of departments. In this way, the demotee's new colleagues will not be the same personnel he or she was formerly supervising. This may be an option only open to larger employers.

'Red Circling' (Or 'Ring-Fencing')

Perhaps the greatest problem faced by a demotee is the reduction of wage or salary or withdrawal of benefit(s) - or both. The means taken to effect the demotion may vary according to the reason for the act. If the demotion is due, for example, to ill-health or an incapacity to perform at a higher level, the Organisation may wish to minimise the financial effects. However, this consideration would probably not apply if the demotion was, for example, an alternative to dismissal for petty theft. In the former case the Organisation might wish to 'red circle' the wages. Under the 'red circling' concept, wages are not actually reduced but (when others are increased) neither are they increased. In effect, the employee's remuneration marks time until inflation - generated and other increases ultimately erode the differential. This needs to be confirmed in writing to avoid any later disagreements or questioning of the arrangement.

Withdrawal of Benefits
The great problem with non-financial benefits is that once allocated they are extraordinarily difficult to withdraw. Whilst pay is to some extent hidden, company VEHICLES, use of senior staff restaurants, and similar benefits have a high profile and may be so highly regarded that their loss could be more markedly felt than a reduction in pay. Nevertheless, in the event of a demotion it would be manifestly unfair to the remainder of the staff for a person no longer entitled to such benefits to retain them. Their loss may be cushioned by them being phased out over a short period - and, if a car is involved, the employee being given the option of purchasing it, possibly on a delayed basis. If the cash value of the car is to be recovered by deduction from wages or salary, a specific authority to carry this out will be needed, whilst the situation regarding the unrecovered part of what is in effect a LOAN, should the employee leave, needs to be addressed.

Employee Agreement
Where there is no right to the employer to demote (if it is not a sanction in the employer's disciplinary procedure), simply because an employee has agreed to a demotion may not be sufficient evidence to allow the employer to reduce the wages of the employee. It would be advisable to prepare a letter for the employee to sign, which both agrees to the demotion of rank AND agrees to a new (reduced) rate of pay in respect of such demotion, with effect from a stated date (see WAGE PAYMENTS). This will avoid the employee trying to claim 'I agreed to the demotion but thought I was going to keep my pay rate' and hence being in a position to claim an unlawful deduction of wages (a breach of a statutory right).

Summary Dismissal

If an employee conduct is such that it goes to the heart of the contract and effectively 'tears up the relationship', it may be acceptable to dismiss without notice. Even in the most extreme situation an employee should be given a chance to explain themselves. Thus, 'instant dismissal' should no longer be used. If the offence is such that continuation of the employer:employee relationship is impossible:

a. the employee must at least be asked for an explanation; and

b. then asked to attend a hearing at which he should have the opportunity to be accompanied.

However, rather than making an instant decision, particularly in the heat of the moment, it may be safer to suspend the employee (with pay) for 24 hours to provide time for reconsideration of the circumstances, make investigations, and take account of any background etc. Far better to spend a day's pay ensuring the correct requirements are observed, than to find that a tribunal case is lost not because the offence did not justify dismissal, but because the employer did not observe the correct procedure.


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