By Helan Ali, Rebecca Brodie, Cameron Crossan, Jack Holland and Eve Richmond (Editor: SJ Crossan)
Introduction
Dismissal occurs where an employers terminates the contract of employment between themselves and the employee. There are several types of dismissal that can arise such as: fair, unfair, wrongful, summary and constructive.
Perhaps the most common mistake amongst members of the public concerning dismissal is the tendency to confuse wrongful and unfair dismissal: they are entirely separate (Crossan, 2017). An unfair dismissal is one which breaches or contravenes statute; whereas wrongful dismissal occurs when the contract of employment is breached.
In all dismissal claims, it is important to determine if the claimant is actually an employee. This status is outlined in S230 of the Employment Rights Act 1996 in that the individual in question must be employed under a contract of service.
Employment law – always a tricky area to navigate as a result of its sheer volume becomes particularly difficult when it comes to the area of dismissal – as there can be a delicacy when it comes to terminating the employee’s contract. If you look at recent media stories, there are several high profile dismissal cases such as former senior civil servant, Sir Philip Rutnam pursuing an unfair dismissal claim against UK Home Secretary, Priti Patel or the UK retailer, Asda (part of the Walmart group) forcing their employees to accept new contracts or to face dismissal.
Unfair dismissal
Fair dismissal occurs when there is a termination of the employment contract, but the employer has the right to act in this manner as per S98(2) of the Employment Rights Act 1996.
The employer may have fair grounds to dismiss an employee under grounds of capability where the employer genuinely does not believe the employee is able to carry out their role any longer. Such a dismissal can be seen in Taylor v Alidair [1978] IRLR 82 where a pilot was dismissed from his contract after he landed a plane negligently and there was serious danger to life and limb. The pilot’s subsequent dismissal was completely fair in the circumstances.
An employer may also have the grounds to dismiss an employee on the grounds of conduct. Generally, one act of gross misconduct could potentially result in an employee’s dismissal. However, employers must have clear guidelines and these must be adhered to, but it does not necessarily mean that in every situation the same same outcome i.e. that of dismissal be the end result. Employers are entitled to have recourse to what is known as a reasonable band of responses, which might include the following:
- Verbal or written warnings
- Demotion
- Dismissal
- Deduction in pay (if the contract so permits)
If the employer has acted reasonably when carrying out the dismissal of the employee, there can be no overturning of that decision by an Employment Tribunal. This is regardless of whether the Tribunal would have taken a more lenient approach i.e. a preference for a final written warning over dismissal (see Iceland Frozen Foods v Jones [1983] ICR 17).
Employees are not exempt from their employer’s code of conduct even when they leave the premises as their actions taken outside of work can still result in a dismissal. This can be seen in McLean v McLane Ltd EAT 682/96 where an employee was drunk and disorderly outside working hours. He was also found to in possession of cannabis (a Class C drug in the UK). This information was released to the media which reported the story and, as a result, the employee was dismissed. This action by the employer was deemed fair by the Employment Tribunal.
Not all employees are fairly dismissed and the actions of the employer might mean that have been unfairly dismissed. To qualify for employment rights regarding unfair dismissal, an employee must normally have a minimum of 2 years’ continuous service (as per the Employment Rights Act 1996), but there are numerous exceptions e.g. discrimination, health and safety and whistle-blowing dismissals.
Employers can, admittedly, find a way around the 2 year continuous service period by employing someone on short-term contracts, thus ensuring that the minimum qualifying period is never met and the employee has not acquired any rights in respect of dismissal.
In some employment roles it is not possible to be unfairly dismissed due to the nature of the role e.g. UK armed forces and/or police service staff. Employees have the right be accompanied to a dismissal meeting if they choose to do so, they can bring a fellow employee or trade union official. Further details on this can be found under S10 of the Employment Relations Act 1999. Employers should adhere to their company guidelines and follow procedural fairness when disciplining employees – especially if dismissal is an option they are considering (as demonstrated in British Homes Stores Ltd v Burchell [1978] IRLR 379).
Wrongful dismissal
Moving on to the issue of wrongful dismissal, where the contract is breached due to the dismissal procedure. The most common example is the employee does not receive the requisite notice period from the employer. In this instance the employee would not require two year’s continuous service to raise a claim in this regard. The statutory minimum notice period, according to S86 of the Employment Rights Act 1996, is one week for each year of service up to a maximum of 12 weeks.
Claims for wrongful dismissal must be made within three months’ minus one day of the effective date of the termination of the contract to the Office of Employment Tribunals (OET). The case of Morran v City Council of Tenants (1998) is highly instructive.
Morran claimed wrongful and unfair dismissal when his employer dismissed him without being given the compulsory notice period; he just missed out on accumulating enough continuous service. Held by the Scottish Court of Session, Morran was entitled to claim wrongful dismissal and receive compensation however he could not claim unfair dismissal as he had never acquired the actual right to bring such a claim. Employees who claim wrongful dismissal tend to be reimbursed by compensation. It would be very rare for an employee to go back to their job after claiming wrongful dismissal.
In fact, S236 of the Trade Union and Labour Relations Act (Consolidation) 1992 states that no court or Tribunal can issue an order for specific implement or anything which will force the parties to work together under an employment contract.
Summary dismissal
Another type of dismissal is summary: “This is when you dismiss someone instantly without notice or pay in lieu of notice, usually because of gross misconduct (for example theft, fraud, violence).” (UK Government, 2020). Summary dismissal if not handled properly can be wrongful or unfair. An employer will need to prove the employee has committed violent or serious acts or health and safety breaches.
Even if an employer feels summary dismissal is the preferred option, it is worth stepping back and taking stock. It is often better and far safer to suspend an employee on full pay and then investigate the situation to head off a potential claim for unfair and/or wrongful dismissal.
Summary dismissal will be justified if the employer can prove the act committed by the employee amounts to gross misconduct in the workplace. However, if the employee can argue that their actions were not that of gross misconduct and no notice period was given employer will be liable for wrongful dismissal. The remedies available to the employee would be compensation.
Constructive dismissal
One last dismissal claim is that of constructive dismissal. This arises when an employer commits a serious breach of the employment contract and the employee has no alternative but to resign. In these types of claims, employees can treat themselves as dismissed as the employer’s behaviour has effectively destroyed the employment contract.
The individual claiming constructive dismissal is saying S/he has been unfairly dismissed and for this claim to be granted they must prove the employer’s conduct was so severe that it amounted to a fundamental or material breach. Constructive dismissal occurs in “situations where the employer made unauthorised deductions from wages; subjected to bullying and harassment; where the employer refused to follow the proper disciplinary or grievance procedures.” (Crossan, 2020)
In Sharp v Western Excavating Ltd [1978] ICR 221, Lord Denning explained the rules regarding constructive dismissal:
“An employee is entitled to treat himself as constructively dismissed if the employer is guilty of conduct which is a significant breach going to the root of the contract of employment… then the employee is entitled to treat himself as discharged from any further performance.”
As a point of interest, Sharpe was not entitled to claim constructive dismissal: his employer was perfectly within its rights to refuse him time off from work to go and play cards. The employer’s behaviour was entirely reasonable and thus did not represent a material breach of the employment contract.
Procedural fairness
When contemplating dismissal as an option for disciplinary offences, it is often safer for employers to suspend the relevant employees on full pay and carry out a full investigation, rather than dismiss employee instantly. Employers should ensure that disciplinary procedures are clear and consistent and comply with current ACAS Codes on discipline at work (see link below).
https://www.acas.org.uk/acas-code-of-practice-on-disciplinary-and-grievance-procedures
Time limits for Employment Tribunal claims
Claims for both unfair and wrongful dismissal must be made within three months’ minus one day of the effective date of the termination of the contract to the Office of Employment Tribunals (OET). Failure by the claimant to submit an application within the time limit will mean that the claim is time barred i.e. it cannot normally be heard by the Tribunal – no matter its merits.
Remedies for dismissal
A claimant who brings a successful action for dismissal may be entitled to the following remedies issued by a court or a Tribunal:
- Compensation
- Reinstatement
- Re-engagement
If the employee can claim dismissal, they could be entitled to compensation and/or reinstatement (failing that, re-engagement if reinstatement to their old position is no longer available). An employer does not have to reinstate or re-engage the employee and may find it more acceptable to pay a higher sum of compensation.
Sir Philip Rutnam
A current unfair dismissal case is that of Sir Philip Rutnam, former Permanent Secretary at the UK Home Office. Sir Philip is claiming unfair dismissal against his former boss, the current UK Home Secretary Priti Patel MP.
Sir Philip resigned because he is alleging that he was subjected to bullying by Mrs Patel (she denies these claims). At the time of his resignation, Sir Philip, was the Home Office’s most senior official, and he claimed that there had been a “vicious and orchestrated” operation against him. Sir Philip presented a claim to the Employment Tribunal for unfair (constructive) dismissal against the Home Secretary. A Cabinet Office investigation was initiated in March 2020 concerning the allegations against Mrs Patel in order to establish if she had breached the ministerial code. (Patel faces unfair dismissal claim from ex-adviser, 2020). The case is ongoing, but if Sir Philip is successful in his action, it will be hugely embarrassing to the UK Government.
Jo Millington
In another, recent case relating to constructive dismissal, a leading forensic scientist called Jo Millington was a victim of sexual orientation discrimination in the workplace. The scientist was asked by her boss whether she disliked him because of her sexuality. Millington, who is gay, took her case to an Employment Tribunal. She launched claims for sexual orientation discrimination, breach of contract and constructive dismissal against her former employer, ArroGen Forensics after the company’s CEO Joe Arend speculated whether her sexuality was the reason behind her evident dislike of him.
Arend had inquired whether Millington had a problem with him “because of her sexuality”, pointing out he was “big” and “used to play rugby”. The Reading Employment Tribunal was told Millington that she had previously complained about Arend’s behaviour when he referred to the level of her expenses and salary as “crazy”. The Tribunal found the company liable for discrimination on grounds of sexual orientation, constructive dismissal and breach of contract. It concluded that Jo Millington regarded her sexual orientation as a confidential matter; Millington was granted compensation. (Lowe, 2020).
No smoking!
In another unfair dismissal story, a long serving worker at a water bottling plant was sacked for smoking on the premises. The employee took a claim to Tribunal for wrongful and unfair dismissal, which resulted in a successful claim. The claimant, Mr Andrew was a team manager for production at Montgomery Waters Limited, where the no smoking rule was introduced in 2004. Employees were, however, permitted to smoke in a designated ‘smoking hut’.
Bosses were informed that Andrew was seen smoking outside the ‘smoking hut’. CCTV was viewed and appeared to show Andrew smoking, on four occasions, in prohibited areas. The footage showed a man wearing red overalls and Andrew was one of two people to wear these. Andrew, who had 15 years’ service with the company, was suspended during the disciplinary investigation. Andrew denied the allegations, but was still dismissed from his employment. During the Tribunal Hearing, the judge highlighted the vagueness in the firm’s handbook on whether smoking in prohibited areas would amount to misconduct. The judge also observed that it was the employer’s responsibility to enforce strict rules restricting smoking in particular areas. Although Andrew’s claims for both wrongful and unfair dismissal were upheld, the compensation awarded to him was reduced by 50% on the basis that he had contributed to his dismissal (Powys County Times, 2020).
New T&Cs
A controversial case regarding the potential threat of dismissal is Asda’s introduction of a new contractual agreement known as ‘Contract 6’, which will replace the existing agreement. It was introduced back in 2017 and, at this time, signing the new contract was voluntary.
‘Contract 6’ abolished paid breaks, introduced compulsory bank holiday working, staff could also be asked to work flexible hours and work in different departments within the store. In August 2019, Asda were accused of forcing employees to agree to accept ‘Contract 6’.
Asda stated that their employees are required to sign the new contract by November 2019 and, if they failed to do so, their contract of employment would be terminated. Employees would not be entitled to sick pay until the contract was signed. The GMB Trade Union attacked the new agreement and claimed that, under the new conditions, employees would be worse off. The main objection raised by the employees and their trade union was the inflexibility of the contract.
Under these new terms, day shift employees had to be more flexible with their working hours – they had to be available for work between 5am and midnight. It also meant employers could give less notice than before with regard to changing shifts. Employees took the view that Asda was disregarding employment law by unilaterally changing key terms and conditions.
In response to the claims being made, Asda may be able to justify their dismissals as fair in terms of Section 98(2) of the Employment Rights Act 1996 on the grounds that the employer can show that some other substantial reason is the justification behind terminating contracts.
In Asda’s case, the company may be able to justify their actions on the grounds that the new contractual arrangements have been necessitated as a result of a company restructuring exercise. This could make the dismissals potentially fair (Crossan, 2017).
Currently, lawyers for Asda and the GMB Trade Union are at loggerheads. One claim for unfair dismissal has so far been submitted by a former Asda employee, Duncan Carson. He was dismissed due to not signing the new ‘Contract 6’. Carson had worked at Asda for 13 years in total, and a large part of his legal argument is that “a contract is an agreement between two parties”. Carson believes, if one person can change the contract unilaterally.
Furloughing employees
The Coronavirus Job Retention Scheme (CJRS), announced by HMRC on 20 March 2020, is a UK Government funded scheme to provide financial support for employers to allow them to continue to pay part of their employees’ wage costs rather than lay them off during this crisis.
Eligible workers are put into the scheme by employers when agreement is made between both, and these employees are now furloughed workers (Association of Taxation Technicians, 2020)
Nunn (2020) explains that the scheme allows companies to ‘furlough’ their employees, covering 80% of the wage cost, allowing the claim to include 80% of their employee’s gross salary with cap of £2,500 a month.
CIPD (2020) defines furlough as a ‘temporary leave of absence from work’ due to economic conditions of affecting the company or country.
Although this is a new concept for the UK labour-force, the scheme does nothing to change how the fundamentals of UK employment law e.g. it does not mean a break in continuity of employment. The employee must give written agreement to the employer before being enrolled in the scheme.
The CJRS ensures the job security of the British workforce due to employers being unable to provide pay.
The official government site (UK Government, 2020) announced that the scheme is only temporary; set to last a maximum of 4 months, with a 3 consecutive week minimum period for each employee to be furloughed.
The government site explains that employees on sick leave are not eligible for furlough whilst the business is reclaiming Statutory Sick Pay. HMRC allows employers with less that 250 employees to reclaim 2 weeks of Statutory Sick Pay for each employee off work for a coronavirus related cause, although the method to do so has still to be put in place by the HMRC. Employees with multiple jobs can also be furloughed from either or both jobs, as the £2,500 wages’ cap applies to each job.
In order to be eligible for the government scheme, the employer must have PAYE account, and each employee must have been included on RTI submission in the pay period on or before 19 March 2020 (CIPP, 2020).
The UK Government (2020) also announced that any employees made redundant before 28 February, due to the impact of Coronavirus, could be eligible for furlough status – as long as they were on the PAYE scheme before they were dismissed. Employers could claim for them also and this part of the furlough scheme has prevented those in industries, such as hospitality, from being almost certainly made redundant.
It is, of course, up to the employer if they choose to furlough any dismissed employees who are eligible to partake in the CJRS and there is no legal requirement for the employer to go down this path.
Therefore, utilising the CJRS gives employers the cash-flow for the wage costs to be able to keep employees on their payroll for when the business reopens, as an alternative to dismissing them during this global crisis. At this present time,it ensures job security for the employee but it may also mean living with a reduced wage.
Conclusion
To summarise, dismissal is a vast and complex area of employment law yet once broken down becomes that bit clearer to understand. The area is ever changing with cases now coming against the Government itself and what pathway that may open if Rutnam is successful in his claim against Patel. There are also the uncertainties in the world just now surrounding coronavirus and the impact it was have on employee’s not only with their wages but with their employment status when this all ends.
References:
Association of Taxation Technicians, 2020. COVID-19: Job Retention Scheme- details for employers [online]. Available at <https://www.att.org.uk/covid-19-job-retention-scheme-details-employers> [Accessed 25th April 2020]
BBC News. 2020. Patel Faces Unfair Dismissal Claim From Ex-Adviser. [online] Available at: <https://www.bbc.co.uk/news/uk-politics-52356574> [Accessed 23 April 2020].
CIPD, (2020) Coronavirus (COVID-19): furlough guide [online]. Available at <https://www.cipd.co.uk/knowledge/fundamentals/emp-law/employees/furlough> [Accessed 25th April 2020]
CIPP,2020. Further updates to Coronavirus Job Retention Scheme guidance foe employers and employees [online]. Available at <https://www.cipp.org.uk/resources/news/further-updates-to-cjrs-employers-employees.html> [Accessed 25th April 2020]
Claire Knowels, 2017. What is the difference between unfair and wrongful dismissal [online] Available at https://www.peoplemanagement.co.uk/experts/legal/unfair-dismissal-wrongful-dismissal-differences (Accessed 26th of April 2020)
Crossan, S. J., 2017. Introductory Scots Law: Theory and Practice 3rd Edition. In: The Law of Employment. Glasgow: Hodder Gibson.
Crossan, S.J. (2020). Constructive dismissal. Scots Law [online] Available at https://seancrossansscotslaw.com/2020/04/09/constructive-dismissal/ (Accessed 26th of April 2020)
Employment Rights Act 1996
Employment Relations Act 1999
Lowe, Y., 2020. Leading Forensic Scientist Wins Sex Discrimination Case. [online] The Telegraph. Available at: <https://www.telegraph.co.uk/news/2020/04/23/leading-forensic-scientist-wins-sex-discrimination-case/> [Accessed 23 April 2020].
Nunn. D, 2020. HMRC reveals 20 April start date for Coronavirus Job Retention Scheme [online]. Available at <https://www.aatcomment.org.uk/trends/coronavirus/april-20-start-date-for-coronavirus-job-retention-scheme/> [Accessed 25th April 2020]
Powys County Times. 2020. Water Bottling Plant Worker Sacked For Smoking In The Wrong Place Wins Compensation. [online] Available at: <https://www.countytimes.co.uk/news/18339002.smoker-wrongfully-dismissed-hearing-rules/> [Accessed 24 April 2020].
Trade Union and Labour Relations Act 1992
UK Government, 2020. Check if you can claim for your employee’ wages through the Coronavirus Job Retention Scheme [online]. Available at <https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme> [Accessed 25th April 2020]
UK Government, 2020. Fair dismissal [online] Available at https://www.gov.uk/dismiss-staff/fair-dismissals (Accessed 26th of April 2020)
Copyright Helan Ali, Rebecca Brodie, Cameron Crossan, Jack Holland and Eve Richmond, 28 April 2020
Seán Crossan's Scots Law 