Firing an employee – how to get it right

Firing an employee – how to get it right

Sacking someone is one of the riskiest things an employer can do. But if you have an underperforming staff member who has not responded to chances to improve there is no alternative.

However, the process is tightly governed by rules and laws, and it is easy to get it wrong, Many employers come unstuck not because the decision to dismiss was wrong but because they did not carry out the dismissal in the right way.

That said, the employer who is worried about sacking someone can take comfort from the fact that, with the right process, they should be in a robust position if the worst happens and the ex-employee embarks on a tribunal claim.

So let’s have a look at how responsible employers handle a dismissal and what they need to know, starting with the four types of dismissal.

1. Fair dismissal

The law gives five grounds for fair dismissal.

i) Conduct

The employee can do the job to the required standards but is unwilling to do so or has committed some form of misconduct.

ii) Capability

The employee is incapable of doing the job properly. This can apply to disabled employees for whom there are no reasonable adjustments that can enable them to work.

iii) Some other substantial reason

This could be something like terminating an employee who was taken on only to provide maternity cover.

iv) Statutory ban

This is where the employee is or becomes not legally able to do the job, for example, delivery drivers losing their driving licence or someone not having a required professional qualification or not having the right to work in the UK.

v) Redundancy

The job the employee does is going to cease to exist, for example, the business is shrinking or getting out of a particular activity or moving.

Dismissal because of illness

This should be regarded as a last resort. Alternatives that should be considered first are obtaining an occupational health assessment or examining if the employee is classed as disabled under the Equality Act 2010 and is therefore entitled to reasonable adjustments to enable him or her to do the job.

2. Unfair, constructive and wrongful dismissal

Typical grounds for an unfair dismissal claim are:
• The reason given for the dismissal was not the real one.
• The reason was unfair.
• The employer acted unreasonably, for example, by not giving the employee notice of the dismissal.

Some grounds for dismissal are automatically unfair. These relate to:
• Pregnancy and maternity.
• Taking family leave.
• Acting as an employee representative.
• Acting as a trade union representative.
• Taking part in lawful industrial action.
• Joining or not joining a union.
• Acting as an occupational pension scheme trustee.
• Being a part-time or fixed-term employee.
• Whistleblowing.

Compulsory retirement on the grounds of age is lawful if it can be objectively justified.

Constructive dismissal

This is where the employer commits some breach of contract with the employee that in effect ends the contract. Examples include:

• Withholding pay.
• Forcing the employee to accept unreasonable changes to the employment that are not in the contract, for example, giving basic work to a senior person.
• Expecting the employee to work in dangerous conditions.

Constructive dismissal is often a result of a breakdown in relations – some employers may be hoping that if the workplace becomes sufficiently intolerable the staff member will resign.

Wrongful dismissal

A dismissal is wrongful if it has not been carried out according to the agreed procedures. It is a breach of contract by the employer, for example, withholding pay in lieu of notice.

3. Getting it right

Many employment tribunal claims succeed not because the grounds for dismissal were wrong or inadequate but because the employer’s process was not robust enough, for example, it was rushed or inconsistent or poorly evidenced.

Unfortunately, UK law does not provide a standard process that will protect employers if they follow it. Instead it requires them to act reasonably in all the circumstances. Key to the concept of reasonableness are transparency, proportionality and consistency.

Employers who perform the following actions can expect not to be challenged on procedural grounds.
• Properly investigate the issues.
• Communicate concerns to the employee.
• Give the employee the chance to respond before a decision is made.
• Consider alternatives to dismissal.
• Offer a right of appeal against a decision.

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4. Common pitfalls

There are more ways of getting a dismissal wrong than there are of getting it right. Errors to avoid include:
• Mislabelling the dismissal. The tribunal will look at the substance of the employer’s reasoning not the label used. If the dismissal is because of redundancy or poor performance the facts must support that.
• Fair reason is not enough. Even when the dismissal does fall within one of the five categories, it must also be reasonable. If a warning, redeployment or offer of further training were also reasonable responses to underperformance the employee has a good chance of winning at tribunal.
• Making a decision before investigating or consulting.
• Inconsistent treatment of the employee. If similar conduct or capability deficiencies in another employee has been handled differently, the employer is vulnerable.
• Gathering evidence selectively after the decision to dismiss has been made.

To avoid these traps, good, contemporaneous record-keeping is essential. The notes of meetings, investigations and made as part of the decision-making process can be expected to have a decisive effect on whether or not the tribunal upholds the decision to dismiss.

5. Dismissal with less than two years of service

This is an area many employers are hazy about, in particular which are day one rights and which are acquired after two years’ service. Day one rights include:
• Breach of contract claims.
• Discrimination claims.
• Dismissal for asserting a statutory right.

Two year rights include claiming for unfair dismissal and for statutory redundancy pay. The two-year period is in fact two years minus one week.

Within the two-year period, employees can be dismissed without prior warning unless the contract says otherwise. However, it is sensible to hold a meeting to put the issues before the employee and gauge his or her reaction. The employee may be considering a claim under a day one right in which case extra care will need to be taken with the dismissal.

Some companies may consider it fairer to use the same process for all employees and applying the formal process to newer employees gives human resources staff experience in handling dismissals. In addition, at a warning meeting information may come to light that may make the employer reconsider the dismissal.

Trade unions

Employees undergoing a dismissal process are entitled to have a trade union representative with them at meetings or another member of staff.

6. Example process

Address performance or conduct issues quickly with employees, and start documenting significant incidents. Assess if you might have any liability under a day one right.

Before the first disciplinary meeting make sure you have notes on all the points you want to cover. They will help to keep the meeting on track and reduce the likelihood of an argument developing.

If the first meeting does not resolve the issues with the employee’s performance you can proceed to a final meeting, although it is often sensible to hold three meetings to show there has been a genuine attempt to find alternatives to dismissal.

In a dismissal employees must be told:
• Why they have been dismissed.
• When their employment contract will end.
• Their notice period if any.
• Their right to appeal against the decision.

This should be set out in writing.

Pregnant employees and those on maternity or adoption leave must be given the grounds for dismissal in writing.

Treat the employee with respect as he or she will be upset. Make sure you have complete privacy for the meeting. Try to use objective language to make the dismissal seem less like a personal rejection and be prepared to provide facts that will back up the dismissal.

Any settlement offer should have been decided upon beforehand. If it is accepted the employee cannot then make a claim for unfair dismissal.

A second person in the meeting is a good idea. It can help keep the atmosphere calm and provides a witness for what was said.

Be tactful about communicating the dismissal to staff and customers; they don’t need to know any more than that the employee has left. The outcome of the disciplinary procedure should be kept confidential.

7. Employment Rights Act 2025 and conclusion

Since 18 February under the Employment Rights Act (ERA) 2025 dismissal for taking part in industrial action became automatically unfair.

The time limit for employees to bring an unfair dismissal claim is to increase from three months to six months from this October.

From 1 January 2027 protection from unfair dismissal will become a right after six months’ employment – currently two years’ service is required. In addition the limit on payouts for unfair dismissal will be removed.

At the same time a ‘fire and rehire’ dismissal will become automatically unfair. This is when an employee is sacked and then rehired but on inferior terms and conditions.

The act is a step change in relations between employers and staff and will be covered in more detail in another article.

Conclusion

It can be tempting not to do anything drastic when faced with an underperforming employee as the risks of provoking conflict in the workplace, legal and financial liability, being short-staffed and damaging company morale are all real enough. However, as we have seen, dismissal can be done in a safe and professional way, and employers who take their time and follow the procedures should have nothing to fear.

Employers who would like individual advice about the tax and financial aspects of dismissing staff should contact Finsbury Robinson.

We offer a full suite of tax, accounting and business advisory services. Our friendly and highly experienced team can be reached on 020 8858 4303 or via email at info@finsburyrobinson.co.uk.