Business Law & Compliance

5 ways to stop your former employee suing you

5 min read

20 November 2014

As an employer, there will be times when you have to make very difficult decisions. Ending the employment of one of your members of staff isn’t a pleasant task but if it has to be done, make sure you follow the correct procedure to protect yourself and your business from a potentially costly employment tribunal claim for unfair dismissal.

Unfair dismissal is when an employer dismisses an employee in a way which is contrary to the requirements of the Employment Rights Act 1996. A dismissal could be unfair if the employer does not have a fair reason for dismissing the employee or does not follow the company dismissal process (e.g. disciplinary hearing, warning, final warning, granting an appeal). 

Only gross misconduct (e.g. intoxication at work or offensive behaviour such as abuse and violence etc) is a fair reason to dismiss an employee who is protected from unfair dismissal without prior warning. Employees are protected from unfair dismissal after two years of service.

If you have decided that that a member of staff’s employment must come to an end, make sure you stick to these five tips on how to do with without getting sued.

1. Follow correct and fair written procedure

Follow the correct procedure as set out in your company’s disciplinary policies and procedures. If an employee has two or more years of service, in almost all cases they must receive at least two warnings prior to their dismissal. Give more if required by your employment contracts or HR procedures. Warnings should be given only after due process and a formal meeting to discuss the issue. 

Hold a meeting prior to the employee’s dismissal and follow the same procedure as for giving out warnings. The invitation to the meeting should spell out that dismissal may be a possible outcome. And if that is the conclusion you come to, confirm the dismissal in writing using an appropriate dismissal letter to detail the process to be followed by both parties, any previous and final warnings, the termination date, arrangements for holiday pay and final salary payment, as well as the right to appeal against the dismissal.

Relevant letters may include:

  • Dismissal letter for misconduct;
  • Dismissal letter for poor performance; or
  • Gross misconduct dismissal letter

2.    Stick to the employment contract

Review the employee’s employment contract carefully and make sure you adhere to every condition detailed to avoid a breach of contract or claim of unfair dismissal.

Unless you’re dealing with a situation of gross misconduct, you must stick to the contract’s notice period too. You will need to provide advance notice as detailed in the contract, which cannot be less than one week for each year of service (to a maximum of 12 weeks) and the employee must be allowed to work throughout their notice period unless detailed otherwise.

3.    Provide a “fair reason” for dismissal

Ensure you provide a “fair reason” for the dismissal, which could be:

  • Capability (e.g. poor performance or ill health);
  • Conduct;
  • Redundancy;
  • Statutory illegality (i.e. the employee can no longer do their job without the law being broken);
  • “Some other substantial reason” e.g. the employee is in situation that creates a potential conflict with business interest (note that this category is not as broad as it sounds so use it with care).

4. Offer the right to appeal

An employee can request an appeal of any decision made during the dismissal process, so do make this clear. As an employer you should make sure to arrange an appeal hearing if it has been requested. If you think there were flaws in the first stage decision, or if new evidence is available, it’s best to hold a full re-hearing rather than a review.

5. Follow Rocket Lawyer’s 

unfair dismissal checklist to make sure you don’t miss out any relevant parts of the disciplinary procedure.

Mark Edwards is general Manager at Rocket Lawyer, an online legal service providing families and businesses with easy-to-use, professional legal documents and affordable help from specialist lawyers.