Dismissal is the process by which you terminate an employee’s contract of employment.

Legislation outlines fair process and procedures for dismissing an employee, meaning that there are:

  • fair dismissals

  • unfair dismissals

  • wrongful dismissals and

  • constructive dismissals.

Above all, the most important aspect of dismissal is to act fairly, lawfully and reasonably.

The following process is a good guideline for conducting a dismissal. As with all people related issues, it is important to document your actions at each stage.

What are the risks

Employment legislation means you can’t just fire your staff on a whim but showing that you are a fair and reasonable employer who will give your staff a real opportunity to change or improve, will inspire loyalty and a desire to do their very best from your employee’s perspective. From your point of view doing the right thing by your staff will mean that you avoid time in an Employment Tribunal (ET) facing an unfair dismissal claim, paying compensation, incurring legal and other costs and damaging your and your business’s reputation.

Key steps to manage this issue

1. Understand different types of dismissal

To be able to follow fair process and procedures for dismissing an employee, you need to be aware of the differences between fair dismissals, unfair dismissals, wrongful dismissals and constructive dismissals.

Fair dismissal

A dismissal is fair as long as you follow a fair process and procedures, and that you dismiss for a fair reason.

The only fair reasons for dismissing an employee (referred to by an Employment Tribunal and defined by the Employment Rights Act 1996) include:

  • Redundancy: For redundancy to be fair, the role must no longer exist, you require less people to do the same role or the role is no longer available at the employee's location.

  • Misconduct: For misconduct to be fair, this could be the result of several previous warnings of misconduct, or it could be what is termed gross misconduct (also known as summary dismissal), where the misconduct is so great eg theft, that it would be impossible to keep the employee in employment from the date of dismissal.

  • Capability: This is where the employee is not capable of fulfilling their role requirements, for example, because of their skill level (note this might also be because of health reasons, but due to the Equality Act 2010 and disability discrimination, it is always advisable to seek advice if you want to dismiss somebody for ill-health capability).

  • Statutory bar: A statutory bar (sometimes known as a statutory restriction) is the term used to describe a situation where you would be breaking the law by continuing to employ a certain employee. For an example, a driver who loses his licence is forbidden to drive and if his/her sole role as your employee is driving, then the action of losing their licence has caused a statutory bar for you, as their employer.

  • Some other substantial reason: Some other substantial reason needs careful consideration, but, for example, if a person receives a prison sentence then they cannot attend for work, and this will mean they are not fulfilling their contract, meaning you have no choice but to dismiss the employee and recruit a replacement.

For a dismissal process to be fair you need to follow the steps required by law and not to discriminate within your processes or in selecting your redundant roles, or the employees within them.

Unfair dismissal

Above, we have discussed the fair reasons for dismissal, so if you dismiss for anything other than above, you run the risk of a claim for unfair dismissal. You are also at risk of this claim if you do not follow proper processes and procedures. To be able to claim unfair dismissal an employee must show that they were employed for at least 1 year (if their employment commenced before 6 April 2012) or for 2 years if they started on or after that date (except where the employee has been dismissed for an automatically unfair reason that does not require a qualifying period). The employee must also lodge their claim within 3 calendar months of the effective date of termination. You can find out more information on unfair dismissals on the Gov.UK page.

Wrongful dismissal

Within every contract of employment, you will have stipulated the notice period you require from the employee, and that you are obliged to give the employee. Any deviation from these obligations by the business could lead to a claim from an employee of wrongful dismissal, whereby they will claim for their losses from you, as you did not complete all obligations in the process.

Constructive dismissal

This can be claimed when your treatment of the employee was so bad that it was impossible for them to continue working for you and therefore they wish to claim for their losses as well as payment for your treatment of them, which has caused them financial loss as they do not now have a job. An example of constructive unfair dismissal might be where the employee suffered mental health issues as a result of the way you or your managers or employees treated them; or where there was a physical attack on the employee.

Settlement agreements

There is another way to terminate a contract, and dismiss an employee, and this is through a settlement agreement, whereby you and the employee agree a settlement (financial and non-financial) which is then verified by an independent legal advisor.

2. Update your procedures

No matter how many staff you employ, it is a legal requirement to have defined grievance and disciplinary procedures. To establish a fair dismissal, you will have to demonstrate that you have followed your procedures to the letter.

The grievance procedure informs your staff of the route they can take if they are unhappy about some aspect of their working life. Such unhappiness can be about their promotion, career development or how they are being treated by others. You can refer to the section on handling grievances for more information on this.

The disciplinary procedure enables you to detail the standards you expect from your staff, with regard to behaviour (conduct) and ability to do their job (capability). The disciplinary procedure will demonstrate that you will give your staff an opportunity to change or improve. It will also set out that following a series of written warnings, if there is no change or improvement, dismissal is a distinct possibility. More information is available in the section on disciplinary issues.

These procedures should be reviewed and updated every year.

3. Do the right things

Although going through a dismissal process can be an emotional and tense time it’s vital that you, as the employer, follow good practice to do the right thing. This includes:

  • keeping an open mind; never pre-judging an issue
  • always giving the accused a right to respond
  • keeping detailed notes of all discussions with staff
  • giving an employee a reasonable amount of time to improve
  • carrying out a thorough investigation at all times
  • not taking too long when dealing with an issue; if there is a delay explain the reasons to those involved
  • allowing staff to be accompanied by a colleague at any meetings
  • always allowing an employee to appeal any decision
  • remembering that a person is innocent until proven guilty

4. Follow a fair process

For a dismissal to be fair, it’s vital that you follow a fair process; this includes:

  • having detailed discussions with all concerned
  • getting details of what the issues are
  • putting these clearly to the relevant person
  • keeping detailed notes of all discussions
  • allowing the person to have a companion
  • speaking to witnesses
  • checking emails, texts and CCTV
  • bearing in mind extenuating circumstances, length of service, and disciplinary record
  • considering what you have done when a similar situation has arisen before
  • informing the parties of your decision
  • allowing a person to appeal

You can refer to the process checklist below for more information.

5. Consider all options

Dealing with difficult issues such as poor performance, absenteeism, bullying or harassment which can culminate in dismissal will inevitably lead you to the employer’s classic crossroad.

You will face two paths. The first will involve managing the particular issue, taking time and care to resolve it and then having to go through a process before you can dismiss that individual. Some see this path, as time-consuming and not cost effective.

The second path involves coming to an agreed separation with your employee. This path turns on making a financial offer that entices an employee to agree not to sue you in return. This is an equally treacherous path that will involve taking advice, dealing with lawyers and negotiating a settlement agreement.

However, you are running a business and it is always worth knowing what your options are in any given situation. Whichever path you choose, it is always worth discussing the matter with a HR consultant or employment lawyer to ensure you are fully aware of the pros and cons.

Tools and resources

Download the dismissal process checklist to help ensure you follow a fair process.

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