Okay, this is a familiar question, dismissal can be a mistake. We need to look at “damage limitation”.
Let’s clarify some points about the dismissal first:
1. Are you sure you have dismissed them?
On one occasion the words “f*** off” were interpreted to mean no more than “go home and come back when you’ve calmed down”. However, as an employer, I wouldn’t count on that as a defence. So your dismissal may not be explicit (although see below). Therefore it may be that it could be denied. But words such as “you’re fired”, “collect your P45 at the payroll department”, or “you are dismissed” are hard to retract (though we have seen it attempted).
Anything less than an explicit dismissal, and you might contact the employee immediately to explain the “dismissal” as being a misunderstanding.. It will always be worth a try; unless you intended the dismissal, of course.
2 Are they claiming dismissal?
Any action on your part, as an employer, that is a “breach of contract” may be claimed as a dismissal. Changing an employee’s hours without consultation; allowing them to be subjected to bullying behaviour or taking actions to “manage them out of the business” can all result in claims for “constructive dismissal”. That is constructing circumstances where the employee is entitled to consider themselves dismissed.
In practice, it is a hard test for the employee, who has to establish they have been dismissed before they have the opportunity to claim a dismissal was unfair. A resignation is not a dismissal, unless the resignation was forced. The late Lord Denning famously stated the breach had to go to “the root of the contract”. Cynically I might say you can cut off all the branches without damaging the root!
Invite the employee in to talk about this dismissal as soon as possible. Such dismissals are not automatically unfair, but “constructive dismissal” nevertheless puts the employer on the defensive. Your objective should be to persuade the employee back into a proper procedure where all the issues can be examined. Your “levers” could be the practical difficulty of them proving constructive dismissal and the potential that there could be a more satisfactory conclusion. Even if the outcome is the same (i.e. a dismissal) it means the employee would have been heard in their own defence first. This would strengthen your position in any subsequent Employment Tribunal claim.
Let’s say you’ve used explicit words but not followed a procedure. Perhaps you’ve reached the end of your tether, maybe got angry or simply made an impulsive decision. The employee does not want to speak to you or any of your team.
1. Offer the right of appeal
If you have dismissed them, then formally offer them the right of appeal. This applies even if the dismissal circumstances are vague, but you still accept that a dismissal has taken place. This should be done as soon as possible and in line with your disciplinary procedure (if you don’t have such a procedure, then contact us).
If an appeal is made then it is crucially important to investigate all the facts. Impulsive dismissals frequently ignore the wider picture, so it is critical to stand back and examine the detail.
Appeals, where possible, should be heard by someone not involved in the original decision to dismiss. If that is not possible then it would be best to involve an external HR professional.
A business owner once said to me “what’s the point” no-one is dismissed without my say-so; why should I hear an appeal? The point is that if the employee already believes they have been treated fairly then they are unlikely to appeal. If they do appeal, then it gives you a second chance to get it right, or check that it is right. Some employees will appeal because they have nothing to lose. But if the dismissal was impulsive, then it is you who has a lot to lose.
2. Encourage the employee to raise a grievance
Constructive dismissals can arise from misunderstandings. Perhaps you haven’t behaved impeccably. Encouraging an employee to raise a grievance, and then hearing it in a genuine and dispassionate manner, can save a lot of pain later.
3. Prepare a timeline
If there is no appeal, no grievance, or if the original dismissal is upheld on appeal or the grievance is rejected, then now is the time to gather the facts . Most of these should have been gathered for any appeal or grievance but there may be new ones emerging at the appeal or the grievance hearing. Either way it is wise, at this point, to start preparing your defence.
4. Seek a settlement (compromise agreement)
If the employee makes a Tribunal claim, don’t attempt to defend the indefensible.
Instead seek a settlement. ACAS will contact you and you can start the process. It is relatively easy to calculate the basic award at a Tribunal. For short service employees the basic award is often not very much in comparison to the cost of fighting a case at Tribunal.
What is more difficult is to estimate any compensation a Tribunal might award. This depends on multiple factors but mainly the claimant (your ex-employee)’s prospects of getting an equivalent job within a reasonable timescale. The length of timescale and the former employee’s earnings determine the compensation.
From the ex-employees perspective cash in hand now may be more attractive than any potential compensation. Indeed the employee does not know whether you will fight the case and even cases that seem predetermined sometimes fail. Therefore they may settle for a sum less than they might otherwise attain.
Compromise agreements, made through ACAS, are not charged for. You may want to take professional advice on the wording. But the cost of that will invariably be less than having a full agreement drawn up by legal professionals.
On the other hand, ex-employees sometimes seek unrealistic settlements which have to be resisted. If ACAS fails then “judicial mediation” may offer a solution. The difference here (and hence the advantage) is that the Employment Judge meets the parties, usually separately but in the same building. It is less expensive than a Tribunal case, although both parties do have to agree to the mediation.
5. if all else fails, “fall on your sword”!
Fortunately, we have never had to do this. It is nevertheless advice given to me by a barrister in my original employment law training.
Tribunals have to decide awards on the basis of reasonable compensation. They are likely to avoid the excesses sometimes sought by naïve claimants. So why expend the cost of fighting a case if you are going to lose in any event? Instead seek a “remedy hearing” which may help you to limit the damage at an economic cost.
Malcolm Martin FCIPD
Author Human Resource Practice