Dismissal covers such a wide area that it is dealt with under four concise articles from Net Lawman. This article concerns unfair dismissal.
Introduction
Unlike "wrongful dismissal", which is an old common law concept, "unfair dismissal" is entirely a statutory creation. A person is "unfairly dismissed" if, and only if, the situation is precisely covered by the precise words of a statute. It is technically possible for there to be "unfair dismissal" when ordinarily there has been neither dismissal nor unfairness.
For example, in ordinary English, the coming to an end of employment on expiry of a fixed term employment contract is not "dismissal". However, it is exactly that for employment law purposes. Even if the employee specifically agrees from the outset that the fixed term will not be renewed he can still claim "unfair dismissal" at the end of the term if he has been employed for the minimum qualifying period and the contract is not renewed.
Additionally, a dismissal could be in breach of contract, totally unjustified and contrary to all good industrial practice and yet not be "unfair dismissal". For example, a dismissal taking effect after 11 months employment could not normally be unfair dismissal because in normal cases a prerequisite for claiming "unfair dismissal" is completion of at least one year's continuous employment with the same or an associated employer by the effective date of termination (''edt'') .
For a person to be able to bring a claim of unfair dismissal it is essential that he or she is (or was) an employee within the meaning of Employment Rights Act 1996.
Time limits
Time-limits for presenting complaints are strictly enforced.
Short extensions are normally granted if the delay resulted from unforeseeable postal delay, because the Tribunal office was closed or if the delay was deliberately engineered by the applicant's "opponent".
There are three time-limits which Tribunals do not have power to extend:
- the six month period for claims under the Equal Pay Act 1970
- the six week period for an appeal against a non-discrimination notice under the Sex Discrimination Act 1975 or the Race Relations Act 1976.
- the seven day period for an application for "interim relief" when an employee alleges unfair dismissal on grounds related to trade union membership or activities contrary to Trade Union and Labour Relations (Consolidation) Act
Fair or unfair?
In unfair dismissal cases the burden of proof is on the employer to show the reason, or, if more than one the principal reason, for dismissing the employee. If the employer fails to prove the reason is one of the four reasons set out in ERA 1996 or "some other substantial reason", the dismissal is deemed to be unfair.
If the employer does prove that the reason for the dismissal was one of those referred to above, the Employment Tribunal must then decide "in accordance with equity and the substantial merits of the case" whether the dismissal was fair or unfair.
There is no onus of proof on the employer or employee for this purpose - the employment tribunal must simply take into account all the circumstances, including the size and administrative resources of the employer's undertaking.
In coming to its decision on fairness an employment tribunal is likely to pay particular regard to whether or not the employer had issued formal policies or rules, for example in a staff handbook or policy document, covering the particular situation (and whether the employee was or ought to have been aware of the relevant policy). It is for this reason that a prudent employer will ensure he has in place formal staff policies covering such day to day matters as internet or telephone use and abuse.
A Tribunal will take into account whether or not the employer followed proper procedures (eg consultation/warning/discussion) before deciding to dismiss the employee. Failure to do so can turn a potentially "fair" dismissal into an "unfair dismissal".
The implied terms in the employment contract can also be of great significance when deciding whether a dismissal is fair or unfair.
Agreement not to go to tribunal
There is no room for contracting out of any of the provisions of the ERA 1996, not just the unfair dismissal provisions subject to important exceptions specified in the Act.
An Employer cannot make a term in the employment contract that forbids the employee from going to tribunal.
Of course, if the worker concerned is not technically an employee he will not have unfair dismissal rights in the first place.
Basic award
Compensation for unfair dismissal is normally built up from two component parts:
· basic award
· Compensatory award
The basic award part is not related to loss suffered. It is simply a multiple of a week's pay (as defined) according to a formula which takes into account years of service and age of the claimant. The practical application of the formula is:
- 1/2 a week's pay for each year worked between 18th and 22nd birthday;
- 1 week's pay for each year worked between 22nd and 41st birthday;
- 1 1/2 week's pay for each year worked after 41st birthday.
The most recent 20 years (only) are taken into account for the purposes of this calculation if a long service employee is being dismissed.
Except in respect of service before age 16 or after age 65 the basic award formula is identical to that used for calculating statutory redundancy pay.
Many awards, including basic award, are now linked to inflation.
Tribunals can reduce the basic award, even to nil, if the employee's conduct merits a reduction. However, once he has been dismissed an employee is not obliged to mitigate his loss so far as basic award is concerned, which is different from the compensatory award position.
New compensation limits
There has been a huge increase in the award limit since the introduction of the ERA 1999. The maximum award has been increased from $12,000 to $50,000. This increase is applicable when the effective date of termination (edt) of employment was on or after 25th October 1999. Since then there have been even more increases shown below.
In addition to compensatory award a successful claimant in an unfair dismissal case is also entitled to a basic award calculated by reference to a fixed formula.
The maximum possible award in "normal" unfair dismissal cases in recent years is/has been:
· £18,600 (£12,000 plus 30 X £220 for maximum basic award ) before 25th October 1999;
· £56,600 (£50,000 plus 30 X £220) from 25th October 1999 to 31st January 2000;
· £56,900 (£50,000 plus 30 X £230) from 1st February 2000 to 31st January 2001;
· £58,900 (£51,700 plus 30 X £240) from 1st February 2001 to 31st January 2002;
· £60,100 (£52,600 plus 30 X £250) from 1st February 2002 to 31st January 2003;
· £61,300 (£53,500 plus 30 X £260) from 1st February 2003 to 31st January 2004;
· £63,100 (£55,000 plus 30 X £270) from 1st February 2004 to 31st January 2005;
· $65,200 from 1st February 2005 ($56,800 plus 30 x $280 for maximum basic award.
Mitigation of loss
When assessing a compensatory award in an unfair dismissal case, the courts and tribunals apply the normal common law rules requiring a person who is seeking damages to "mitigate his loss".
An employee has no obligation to mitigate loss if the employment contract itself provides for the amount to which the employee will be entitled in the circumstances which have arisen.
However, the amount must not be so unreasonable as to count as a "penalty" as in that case it would be simply invalid under general common law principles.
Remedies
All remedies are provided by statute alone. Under statute, if a Tribunal finds an employee has been unfairly dismissed there are three options open to it. The court can make an order for:
· Reinstatement;
· re-engagement; or
· Compensation.
Reinstatement means giving the same job back to the employee with the same employer.
Re-engagement means giving the employee a new job with the same employer.
There is no power for a tribunal to order both reinstatement (or reengagement) and compensation.
There are special rules which ensure that the statutory limit on compensatory award can be exceeded in cases where an employer refuses to comply with a reinstatement or reengagement order. If there were no such rules it could be cheaper for an employer to ignore the order than to comply with it.
Relevant document templates:
Maternity leave notices
http://www.netlawman.co.uk/csdoclist/employees.php
Documents on dismissal
http://www.netlawman.co.uk/bizdoclist/dismissal.php
Work from home agreements
http://www.netlawman.co.uk/bizdoclist/consultancy-contracts.php
Employment Contracts
http://www.netlawman.co.uk/bizdoclist/employment-contracts.php
Employment – problems and termination
http://www.netlawman.co.uk/bizdoclist/dismissal.php
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