Dismissing an employee can be a difficult area to tackle for employers especially if the employee has worked for the company for 12 months or more because they attract Unfair Dismissal rights.

However, if the employer has put employment contracts in place and can show that they have followed the correct procedures fairly and competently then they are more likely to successfully defend a tribunal case following a dismissal.

The Employment Act 2002 requires employers, as of 1 October 2004, to follow new statutory discipline and grievance procedures and make employees aware of these procedures and their right to apply the grievance procedure and their right to appeal against decisions made during the disciplinary procedure. Failure to follow them is very likely to lead to a finding of unfair dismissal and may increase any compensation payable.

Employment Law provides five potentially fair reasons for dismissing an employee. They are as follows:

1. Conduct (where the employee’s behaviour is seriously unacceptable)
2. Capability (where the employee can no longer do their job)
3. Legality (for example where the loss of his driving licence means the taxi driver cannot drive legally)
4. Redundancy (for example where there is insufficient work – the rules are very detailed in this area)
5. Some other substantial reason (this is called the catch-all reason but it should be used carefully because you have to show that the reason was ‘substantial’.)

Remember that these are not ‘fair reasons’ until the procedure is followed and the allegations investigated and proven; if the procedure is not followed it is likely to be regarded as an automatically unfair dismissal. The compensation limits for unfair dismissal currently stand at £8,700 basic award and £58,400 compensatory award.

If you wish to dismiss an employee for something other than the five potentially fair reasons listed above you are likely to find yourself in hot water and facing a costly tribunal remember also that other claims, such as a sex discrimination, have no upper limit on the amount of compensation which can be awarded.

You are advised to take legal advice in respect of the particular case before dismissing any employee.

For more on this subject see the Guide to sacking an employee.