Bidding farewell to problem employees: legal solutions

Following on from the “20 ways to be a terrible employee” article, the Real Business team have asked me to lay out some legal and commercial solutions to getting rid of problem employees.

Risk factors

If you are an employer who has reached the end of their tether with a problem employee, then you must first decide whether you would like to take a “high risk” or a “low risk” approach to ending their employment. This may seem a stark and surprising distinction, but different employers will have different management strategies depending on their size, budget and industry.

High risk – pull the plug

If you decide that you need to terminate the problem employee’s contract as soon as possible but they have not technically committed gross misconduct according to their employment contract, then you can simply give the employee notice under their contract. Alternatively, if their presence is disruptive or performance negligent and you do not want them to work out their notice period, then you can provide a payment in lieu of notice, if the contract allows for such payment.

The risk of this approach is that the employee may commence a claim for unfair dismissal in the Employment Tribunal. However, they will only be able to bring a claim if they have two year’s continuous service, if their employment started after 6 April 2012 (or one year’s continuous service if their employment started prior to 6 April 2012).
It is also worth noting that recent employment law changes mean that the maximum award for unfair dismissal is the lesser of £74,200 or one year’s salary. Thus, if an employee is paid £25,000 a year then this is the maximum that they can be awarded at an Employment Tribunal as it is less than £74,200. 

However, please be aware that this approach attracts more risk if the employee has a claim for discrimination as there is no qualifying period (period of continuous employment) and no limit on awards for discrimination claims.

Low risk – plug the gaps

The usual and less risky way to terminate a problem employee’s contract is to follow, to the letter, the employer’s disciplinary procedure. If you do not have a disciplinary procedure then there is a default to the ACAS Code of Practice. Any deviation from your internal disciplinary procedure or the ACAS Code of Practice disciplinary procedure could make a dismissal unfair and also result in an increase in possible compensation for the effected employee. 

If the procedure is followed closely with no deviations then when the employer terminates the employee’s employment there is less risk of a subsequent claim for unfair dismissal. Key factors to note, among others, of any disciplinary procedure is to allow the employee to be accompanied at the disciplinary meetings and also allow the employee a chance to appeal the final decision.

Gone, not forgotten?

Clearly the safer route is to take the low risk approach but this will take longer as all disciplinary procedures should allow the employee a time frame to improve their behaviour. A quicker approach is the high risk route but this leaves the door open for an employee to make an unfair dismissal claim. Requiring the employee to sign a settlement agreement which protects the employer from future claims is also an option but payments to employees under such agreements are open to negotiation which can push the price up and employees may refuse to enter into such an agreement.

Rory Lynch is an associate at Spring Law.

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