When is it fair to dismiss an employee?

Posted: 11th May 2015

When is it fair to dismiss an employee?

As the government plans to shelve its proposals to allow small businesses to dismiss workers without giving a reason (provided they pay a redundancy style payment), we review recent changes in unfair dismissal law to give employers an idea as to when it is fair to dismiss an employee, and what they need to consider in doing so.

Many employers find themselves in the situation where they have an under performing employee, or an employee who does not have the right attitude for their organisation and who they really would like to dismiss, but they are concerned about the possible conflict or legal action being taken against them if they do dismiss that employee.

Since 6th April 2012, new and incoming employees need in most cases, to have two years continuous service with you before they can sue you for unfair dismissal.  Employees who commenced employment prior to the 6th April 2012 need to have a years employment with you before they can claim for unfair dismissal in most cases.

However there are exceptions to this requirement which include the following cases where an employee does not need to have 1 or 2 years service to bring a claim for unfair dismissal :-

  1. Dismissals which are due to an employee exercising their legal rights as an employee.
  2. Dismissals for discriminatory reasons, such as for age reasons, or because of an employee’s gender, race, disability, religion of belief, or sexual orientation.
  3. Dismissals due to an employee “whistle blowing” and making disclosures about their colleagues or employers, such as where their colleagues or employer are breaking the law themselves.
  4. Dismissals due to an employee being pregnant or on maternity leave.
  5. Dismissals due to an employee being in part-time work or on a fixed term contract.

This list is not exhaustive, and employers need to be aware that even if an employee has not got the full year’s service (or in the future the full two years service) there are some cases where they may be eligible to bring a claim for unfair dismissal.

There are however fair reasons for an employer to dismiss an employee and these include the following :-

  1. The employee’s capability.

This can include in some cases, where reasonable, where an employee has an illness or is unable to attend work to carry out the job in which they were employed.  This in itself can be a minefield for employers, and particular care needs to be taken when an employee would be classed as disabled.  In those cases, an employer has to consider whether or not they can make reasonable adjustments to accommodate the employee.  In other cases, for example if an employee has been on long term sick, it may be appropriate for an employer to bring in an Occupational Health Therapist to assess the situation and give a view as to whether or not the employee will be able to come back to do most or all of their current role.  In some cases however it will be reasonable for an employer to dismiss an employee for reasons of health and capability.

Another example of this is cases where an employee is under performing.  In this case, where an employee is unable to meet their targets or perform at a level which an employer reasonably expects, we would normally advise an employer to carry out a “performance review process”.  What is needed in each case will vary depending on the nature of the employee, their capability issues,  and the organisation and we would recommend that an employer take advice on this issue as early action can make the process easier for both parties.  Normally it involves giving the employee as much support as is reasonably possible for the organisation to improve their performance, and if an employee then fails to improve over a reasonable period of time, it may be fair to dismiss them, setting targets and timescales in which it is expected for the employee to improve.


  1. Redundancy

Obviously this is a well known fair reason for dismissal, a redundancy is normally due to the fact that there is not enough or any work for an employee to carry out.  Again whilst a redundancy situation can be a fair reason for a dismissal, it is vital to ensure that you carry out a consultation process and follow fair redundancy procedures and that you have a fair procedure in place.

An employee will also need to be compensated in line with their contract and/or the legal minimum redundancy payment.  Again we would advise you to take legal advice if you are considering a redundancy process as to whether or not a redundancy situation exists, and how it will be best to handle the consultation process and how much money the employee would be entitled to by way of compensation.


  1. Any other substantial reason

This can include issues such as a re-organisation of the business, the imprisonment of the employee, or an unresolveable personality clash between employees.  Again it is important, to follow an appropriate procedure of consultation and to ensure that the employee has an opportunity to appeal against their dismissal.  Again we would advise you to take advice as to whether or not the proposed reason is a fair one and how to handle the consultation process.


  1. Retirement

The rules about the default age of retirement changed in April 2011.  Now you are only able to dismiss an employee for retirement reasons if you have your own compulsory retirement age as an employer or organisation, that can be objectively justified.  Again with the rise in age discrimination claims being made, we would recommend that you take advice as to whether or not you can objectively justify your default retirement age and how to go about the consultation process with the employee prior to dismissing them.




Whatever the reason, for dismissal, it is important to follow an appropriate procedure.  This always includes giving the employee an opportunity to appeal against their dismissal.

At Painters we offer initial fixed fee consultations for businesses and employers including a meeting of up to an hour and a letter of advice, outlining the general legal position.  This can be particularly useful for employers who are considering whether or not its appropriate to dismiss an employee, and how to go about doing so.

During our meeting we will endeavour to give you as much advice as possible as to how to follow the appropriate procedure and also give you an indication as to any further costs in the event that you require us to assist you with further work such as advice on consultations procedure or preparing a Compromise Agreement for an employee you have selected for dismissal.


For more information please contact Louise Williams at lmw@painters-solicitors.co.uk or Adrian Harling at ach@painters-solicitors.co.uk.