Dismissal 1
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| Introduction |
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A definition of ‘dismissal’
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The precise meaning of dismissal is very important. If a person has not been dismissed, he will not be able to claim compensation for unfair dismissal, nor will he be able to claim dismissal by reason of redundancy.
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These definitions provide for 3 situations (only) to count as dismissal for purposes of unfair dismissal and entitlement to statutory redundancy pay:
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- Termination of the employee's contract by the employer, with or without notice;
- Expiry of a fixed term contract without renewal;
- Constructive dismissal.
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In addition, a woman whose employer refuses to allow her back to work after maternity leave will normally be treated as dismissed.
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If a resignation is forced, it may count as dismissal.
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If an employer keeps an employee in his employment, but on a different contract, the employer is terminating the existing contract and it will count as dismissal.
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Constructive Dismissal
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As a general rule an employee who resigns in circumstances such that he is entitled to terminate without notice by reason of the employer's conduct is treated as having been dismissed. This is generally wrongful dismissal. It may also be unfair dismissal and/or redundancy.
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An employee, who resigns purely because he decides to, is not dismissed at all and therefore he can bring no claim against you.
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Resignation in protest against an employer's refusal to pay the National Minimum Wage may be a example of a situation in which an employee could claim that he had been constructively dismissed.
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From the employer's point of view the consequences of constructive dismissal can be more serious than simply having to pay damages. On termination of the contract, by the employee, the rights he previously had under it are void. It will therefore be likely that an employer will not be able to enforce post-termination restrictive covenants in a senior employee's service contract and/or the requirement that the employee must serve out a minimum notice period.
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If an employer does something in relation to an employee which is so bad that it breaches the employee's contract, the employee can be entitled to resign and claim constructive dismissal The employee is likely to be able to bring an unfair dismissal claim under the Employment Rights Act 1996. Discriminative actions in these circumstances are slightly more complicated and follow their own specific rules.
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A change in terms of employment can occur at any time but is especially likely when a business is sold or otherwise transferred to new owners. The employee retains his normal common law right to treat himself as constructively dismissed if a substantial change to his conditions is made to his detriment.
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Fixed Term Contracts
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A fixed term contract will expire on a date specified in the contract. However, it is only fixed term if the date is a maximum period, not a minimum period.
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This definition is important. The ending of a fixed term contract without renewal would not be dismissal and therefore rights such as unfair dismissal rights would not be available.
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Under common law, expiry of a fixed term contract simply brings the contract to an end. There is no dismissal and therefore there would be no compensation for unfair dismissal or dismissal by reason of redundancy. That does not mean that employees in a fixed term contract cannot be dismissed! The Employment Relations Act (ERA) provides special rules. If the contract is not renewed, the non-renewal counts as dismissal. Whether that dismissal is unfair or not must then be decided according to the normal rules.
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Save in exceptional circumstances, employers must always consult with employees before dismissing them - failure to do so will normally make the dismissal unfair. This rule applies even on expiry of a fixed term contract, especially if the employer might have alternative work available.
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Since 25th October 1999 (in respect of unfair dismissal) and 1st October 2002 (in respect of statutory redundancy pay) it has not been possible for an employee and employer to come to a legally enforceable agreement that the employee.
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Contracts of employment can not include exemption clauses which waive unfair dismissal or statutory redundancy pay rights of the employee on expiry of a fixed-term contract.
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Additionally, since October 2005:
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- Fixed term contracts are automatically converted to contracts of indefinite length after four years (the four years cannot start before 10th July 2002);
- It is unlawful for an employer to treat a fixed-term employee less favourably than he treats a comparable permanent employee unless the treatment is objectively justified;
- A fixed term employee who considers he is being treated unfairly can require his employer to provide a written statement setting out the reasons for the treatment complained of.
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The effect is that from an employment law point of view, fixed term contracts no longer have quite the same benefits for employers which they had until October 2002.
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Entitlement to reasons for non-renewal
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Dismissed employees who have completed one years' continuous employment are entitled on request to a written statement from their employer stating the reasons for dismissal.
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Neither the one year service requirement nor the need to make a request for the written statement apply in the case of a woman dismissed while she is pregnant or during her maternity leave period.
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Time limit for claims
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The normal time limit for bringing a claim under the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, is three months from the date of the less favourable treatment or detriment to which the complaint relates or, where an act or failure to act is part of a series of similar acts or failures comprising the less favourable treatment or detriment, the last of them.
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A tribunal may consider a complaint which is out of time if, in all the circumstances of the case, it considers that it is just and equitable to do so.
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Frustration of contract
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Frustration is when an event occurs, which is not reasonably foreseeable when the contract was made and not under the direct control of either party, which renders impossible further performance of the contract.
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This concept is very important. There is no dismissal if employment comes to an end due to frustration of contract. The ex-employee has no right to unfair dismissal compensation, nor to redundancy pay (subject to statutory exception for redundancy pay if the contract has been frustrated by death of the employer).
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Apart from death (of employer or employee) the following are examples of situations which could lead to discharge of an employment contracts by frustration:
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- Illness (although this will normally have to be long and serious to result in frustration of the contract);
- Imprisonment (although this will normally have to be long in relation to the employee's length of service to result in frustration of the contract);
- Internment;
- Change in the law.
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Garden leave
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An employee who has been given notice of dismissal (or who has himself given notice to quit) and who continues to receive normal salary but is told not to report for duty during the notice period is said to be on garden leave.
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Typically this happens if an employer needs to protect himself against competition or poaching of customers clients staff by a senior employee who has given notice or is to be dismissed. Restrictive covenants are unreliable and difficult to enforce against ex-employees so it may be attractive for the employer to send the employee home on garden leave.
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An employer may have difficulty in imposing gardening leave if there is no specific contractual provision giving him the right to do so.
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Instant dismissal
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Instant dismissal or summary dismissal is the dismissal of an employee on the spot, without notice.
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Normally an employee will be entitled to the notice period provided by his her contract or to the relevant minimum statutory notice period if greater. Only in exceptional circumstances will dismissal without notice be justified. If instant dismissal is justified there is a specific exemption from any requirement to give notice.
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If the dismissal is justified it will not be wrongful dismissal. It may however still be unfair dismissal and normally will be if the employer has failed to consult the matter with the employee.
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