How can employers terminate employment

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Termination of employment is never easy and an area most employers find difficult to handle.  Businesses of all sizes and types use us as a sounding board to avoid mistakes before ending staff employment.

Risk of employment law claims

We mitigate the risks by analysing the following:

The legal reason for ending the employment

The reason determines the employer’s procedure and the employee’s contractual payment entitlements. Broadly reasons are:

Gross misconduct

Gross misconduct dismissals can be instant, potential reasons could include e.g.

  • Fraud;
  • Drink or drug related offences;
  • Offensive behaviour;
  • Breach of restrictive covenants;
  • Misuse of confidential information

Employers must have evidence they followed a fair procedure. Typically, this includes an investigation and disciplinary hearing.  Employers should plan on employees appealing the disciplinary hearing outcome.

Poor performance

In practice, poor performance is unlikely to constitute gross misconduct. Employers must go through a capability procedure. To avoid claims, this procedure must be correctly executed.

In practice, employers often compromise the employee out of the business, and offer a settlement agreement.  We often advise on the amount to offer in the settlement agreement.

Redundancy

We advise employers on how to deal with making staff redundant whilst avoiding unfair dismissal claims. Employers often worry about how quickly they can fairly deal with the process given that paperwork and evidence of fair selection must be prepared and applied. For clients, we prepare the appropriate paperwork.

Note, employees have no right to appeal a redundancy decision, unless the employment documentation includes this right.

Discrimination claims post employment

An employee faced with dismissal may claim discrimination. Most employees know that if their discrimination claim succeeds, their compensation is potentially uncapped. In addition, they may gain an award for injury to feelings.

Some claims are genuine. Many employees claim once they know their employment is terminated. Often employees allege discrimination as part of an attempt to increase their employment termination package. Usually, a robust defence quickly ends the claim. If the employee persists then the law around the burden of proof, if applied tactically, often helps employers.

Whistleblowing

An employee might claim their employment was terminated as a result of a protected disclosure, i.e. a whistle-blowing claim.

Whistleblowing allegations are common in financial services and the public sector. Even if the claim is not genuine, employers must respond.

Constructive dismissal

An employee who has not yet been dismissed may resign and claim constructive dismissal. The employee claims that the employer’s conduct was tantamount to a breach of the employment contract.

The employer’s response depends on the facts and when the employee informed the employer. We quickly determine if you can eliminate the claim. At other times, the rules of contributory fault can reduce potential compensation.

Settlement agreement and payment

Most employers avoid devoting the management time to fighting the case in the Employment Tribunal. A sensible settlement agreement depends on what an Employment Tribunal or Court would award the employee.  We use the following factors to formulate an offer:

Could you have followed a correct procedure and dismissed fairly?

A dismissal that was inevitable, substantially reduces any unfair dismissal claim.

Does the employee have legal expenses insurance?

An insured employee is usually more willing to litigate.

How long will the employee take to find another job?

The employee’s age, skill set, and industry experience are factors. Settlement agreement cover loss of earnings, although employees have a duty to mitigate their losses.

Has the employee already found another job?

We often make settlement payments conditional upon employees warranting they have not received a job offer.

Does the employee have on-going losses?

The maximum award for on-going losses usually covers 24 months.

Can the employee easily pay Employment Tribunal fees?

Now that employees must pay fees to the Employment Tribunal when commencing a claim, the number of claims has dramatically reduced.

Are you making an example of the employee?

Usually this is so other employees drop their unfair dismissal claim. You could refuse to settle and call the employee’s bluff. This is known as the floodgates principle.

Is the employee needed for a hand over?

Clearly we consider practicalities.

Does the employee have two years continuous service?

If not, then the employer’s exposure may only be the notice period.

What is the best timing for entering into a settlement agreement?

Usually, employees must bring their claim within three months of termination of employment. You don’t need to offer a settlement, until you’ve received a claim.

Often employees threaten to bring claims when their employment is terminated. However, they move on, and don’t bring the claim. Hence waiting can save you money.

Does the employee hold company shares?

Termination of the employment contract might trigger a compulsory sale of shares. Then, termination requires planning. For instance, consider who will purchase the shares, at what price.

Whistleblowing

Whistleblowing laws require qualifying disclosures to be in the public interest. There is no longer a requirement for the whistleblower to be acting in good faith.

However, “public interest” is not defined. Ultimately, the Employment Tribunal or Employment Appeals Tribunal defines the term.

Protected conversations

Protected conversations or pre-termination negotiations, in general, are no longer admissible as evidence in unfair dismissal cases.