Employment Disputes

You don’t need us to tell you that running a business isn’t easy, and often the way your employees behave or perform can be one of your main headaches. Sometimes you will be able to improve their conduct or performance by talking to them or warning them, but that won’t always be enough and there will be times when you feel that the only way forward is to dismiss. If you dismiss someone who you have employed for over a month they will be entitled to at least a week’s notice and possibly more if you’ve agreed a longer notice period. Asking them to work that notice period or paying them the equivalent amount of money doesn’t stop the employee from being able to bring a tribunal claim. In many situations if you don’t have a fair reason for dismissal or don’t follow the correct procedure you will be in danger of facing an expensive tribunal claim, and you will probably lose.

Does an employee have to be employed for two years to claim unfair dismissal?

The general rule is that if someone’s employment ends before they have a year and fifty-one weeks’ employment they can’t bring a claim for unfair dismissal. However, if the dismissal is for one of the following reasons the employee may not need to have that length of service:

• Pregnancy, childbirth, or statutory maternity, paternity, adoption, parental leave, shared parental leave or time off for dependants
• A health and safety reason
• A shop or betting worker refusing to work on a Sunday
• For a reason connected with the working time regulations (for example a dismissal for taking holiday or rest breaks)
• A Health and safety reason
• Performing the functions as an occupational pensions trustee
• Performing functions as an employee representative on a TUPE transfer or collective redundancy.
• Whistleblowing
• Asserting a statutory right
• In connection with making a flexible working request
• Related to the minimum wage
• Enforcing rights in relation to working tax credits
• Blacklisting (in connection with a prohibited list of trade union members)
• Time off for training
• Carrying out jury service
• Duties under an auto-enrolment pension
• In connection with an information and consultation agreement
• In connection with European works council activities
• Working part-time
• Status as a fixed term worker
• Trade union recognition
• The right to be accompanied (to disciplinary or grievance hearings)
• Protected industrial action
• Exercising rights as an agency worker
• Redundancy selection for any of the above
• Breach of an exclusivity clause in a zero hours contract.

If dismissal is for one of these reasons it will also be automatically unfair.

It’s also important to note that if someone is dismissed for a discriminatory reason (age, disability, gender reassignment, marriage and civil partnership, race, religion or belief or sex) they will be able to bring a discrimination claim regardless of their length of service.

What are the potentially fair reasons for dismissal?

There are five potentially fair reasons for dismissing an employee:

• Conduct
• Capability (which relates to both performance and absences)
• Where it is unlawful to continue employing them
• Redundancy
• Some other substantial reason

If a dismissal isn’t for one of these reasons it will be unfair. You may be thinking that you will always be able to argue that a dismissal was for some other substantial reason, so why worry, but you can’t squeeze every dismissal into that category. Common examples of dismissals that have been found to be for some other substantial reason include:

• Business reorganisations
• Refusal to accept changes to terms and conditions of employment
• Personality clashes
• Reputational risk
• Breakdown in trust and confidence

Being able to show that dismissal was for a potentially fair reason is only part of the battle. In order to avoid a tribunal finding that you have unfairly dismissed someone you also need to be able to show that you have followed a fair procedure. So even if you have a perfectly good reason for dismissing someone, if you fail to follow the correct procedure a tribunal may find the employee was unfairly dismissed and could award compensation. There can be other repercussions too, for example, some senior employees may have rights to enhanced payments for shares if they are unfairly dismissed.

How do you follow a fair procedure?

The procedures differ depending on the reason for the dismissal. You can read more about the procedures on our pages on disciplinary and performance management procedures, sickness absence management, and redundancies, but a brief overview of some of the procedures is set out below. In any event it is always sensible to seek legal advice before dismissing an employee for any of these matters.

Dismissals for misconduct/gross misconduct

The process for dealing with a conduct matter is detailed, and should involve complying with your business’ disciplinary procedure (which itself should comply with the ACAS Code of Practice on disciplinary procedures), but in summary should involve:

• Someone carrying out an investigation into the allegations and collating relevant evidence
• The employee receiving a letter:
  • inviting them to a disciplinary hearing (sufficiently far in the future that they have enough time to prepare)
  • informing them of the allegations against them
  • enclosing the relevant evidence
  • informing them that they can be accompanied to the disciplinary hearing by a work colleague or trade union official
  • warning them of the potential outcome
• A different person to the person who carried out the investigation conducting a disciplinary hearing where the allegations are discussed
• The employee receiving written confirmation of the outcome and their right to appeal
• An appeal being held if the employee requests one.

Employees will only normally be fairly dismissed for conduct if they have committed an act of gross misconduct (examples are often listed in your disciplinary procedure) or if they have previously received a final written warning that is still active when they commit another act of misconduct. It’s worth noting that if someone is dismissed for a series of acts of misconduct they will be entitled to either work their notice period or be paid the amount they would have earned if they had.

It’s important to note that if you don’t follow a process that complies with the ACAS Code of Conduct on disciplinary procedures, not only will it likely result in a tribunal finding a dismissal unfair, the tribunal can also increase the employee’s compensation by up to 25%.

Dismissals for poor performance

The process for dismissing employees for poor performance largely mirrors the process for conduct dismissals, but again should also be applied in a way that is consistent with the business’ capability/performance management procedure.

The main differences from the procedure for dealing with conduct issues are that:

• Employees can rarely be fairly dismissed for a one off act of proof performance, unless that poor performance is bad enough to be considered “gross negligence”, which is unusual
• As a result employees are usually given a series of warnings before being dismissed for poor performance and at each stage will be set a period of time in which to achieve specific targets, for example, a sales person’s first warning might state that they need to achieve £x sales during the month following their capability hearing or they may receive a further warning.

Dismissals for sickness absence

The process again is very complicated and will differ depending on the individual circumstances as well as whether the employee is being dismissed following a long term absence or for a series of absences. Please take a look at our page on dealing with sickness absence for more details.

Dismissals for redundancy

Again it is important to follow a fair procedure, and to comply with any internal procedure, but a detailed explanation is provided on our redundancy page.

Dismissals when it becomes illegal to employ someone or for some other substantial reason

There is no specific process to follow if you dismiss someone because you think it’s illegal for them to continue working for you, or if you are dismissing them for some other substantial reason. However, some dismissals that employers have called dismissal for “some other substantial reason” have been found by tribunals to be for conduct or capability so a failure to follow the correct procedure has still rendered them unfair. Similarly if a procedure isn’t followed employers may fail to realise that it is not illegal for an employee to continue working for them, or fail to consider whether they could carry out a different role lawfully, or if dismissing them is discriminatory. On that basis it is sensible to follow a similar process to the process for a disciplinary hearing but we strongly suggest you seek advice on the exact process if you are faced with either of this type of situation.

What does a tribunal take into account when deciding if a dismissal was unfair?

As set out above a tribunal will check that you had a fair reason for dismissal and followed a fair procedure. In addition it must decide whether the dismissal fell within a band or range of responses that a reasonable employer may have come to.

What’s this I’ve heard about employees claiming unfair dismissal when they were not dismissed?

Employees can walk out of their jobs and claim unfair dismissal if they believe their employer’s actions are so bad that they are the equivalent of dismissing them. For example, if an employer fails to pay an employee, or they commit acts of discrimination against them, the employee may feel it is no longer possible to work for them and resign. Claims of this type are known as constructive dismissal. The employee is usually in a stronger position if they resign with immediate effect. If they offer to work their notice you can argue that they can’t have felt your actions were so bad that they couldn’t continue working for you, as they did continue to work for you.

How much compensation can be awarded?

If an employee brings a successful claim of unfair dismissal they may receive the following compensation:

• A basic award – this is calculated in the same way as redundancy pay and results in the employee receiving a week’s pay (capped at the rate set out here) for each complete year worked for the employer. Only the most recent twenty years’ service are taken into account. A multiplier of 1.5 applies for any complete years worked over the age of 41 (so the employee got a week and a half’s pay for those years) and a multiplier of 0.5 applies for complete years worked under the age of 22 (so the employee only gets half a weeks’ pay for those years).
• A compensatory award – aimed at compensating the employee for any losses suffered as a result of losing their job. This is usually capped at the lower of either a year’s gross pay or a specific amount set by the Government each April (see Current Rates and Limits) but there is no cap if the dismissal is for whistleblowing or a health and safety reason.
• Notice pay – if the employee was dismissed summarily (without either working or being paid for their notice period).
• Compensation for failing to allow them to be accompanied to a hearing – capped at two weeks’ pay (see here for current limits on a week’s pay).
• Compensation for failing to issue them with a contract of employment – either two or four weeks’ depending on what the tribunal thinks fair (see here for current limits on a week’s pay).

There can be additional awards if a dismissal is found to be for one of the automatically unfair reasons.

Even if a tribunal finds against you it can take into account the employee’s behaviour/performance and reduce the compensation if it believes the employee was partly responsible for their dismissal and/or would have been dismissed in any event.

When looking at the compensatory award the tribunal may also be persuaded that an employee could have got another job sooner and/or at a higher rate of pay if you can produce evidence that is the case. If a tribunal does accept that they will only award the amount they feel the employee would have lost if they had obtained a job sooner and/or at a higher rate. For that reason it’s a good idea to start collecting adverts for suitable jobs for that person after you have dismissed them.

Facing a tribunal claim from an employee or ex-employee can be stressful, expensive and time consuming. For those reasons it’s best to make sure that you have robust contracts of employment and policies & procedures in place, and take advice early in order to reduce the prospect of a claim. However, even if you take those measures you may still be faced with a claim. If that happens we can help.

What outcome might there be if I lose a tribunal claim?

Many people assume that compensation is the only remedy that employment tribunals can award, but if an employee brings a successful claim the tribunal can also order reinstatement or re-engagement i.e. they can order you to take the employee back. For many employers this is even less attractive than having to pay compensation.

Compensation for a successful wrongful dismissal will usually be an amount the employer has failed to pay the employee, for example, notice pay.

Compensation for a successful unfair dismissal claim could consist of:

• A basic award – this is calculated in the same way as redundancy pay and results in the employee receiving a week’s pay (capped at the rate set out here) for each complete year worked for the employer. Only the most recent twenty years’ service are taken into account. A multiplier of 1.5 applies for any complete years worked over the age of 41 (so the employee got a week and a half’s pay for those years) and a multiplier of 0.5 applies for complete years worked under the age of 22 (so the employee only gets half a weeks’ pay for those years).
• A compensatory award – aimed at compensating the employee for any losses suffered as a result of losing their job. This is usually capped at the lower of either a year’s gross pay or a specific amount set by the Government each April (see Current Rates and Limits) but there is no cap if the dismissal is for whistleblowing or a health and safety reason.
• Compensation for failing to allow the employee to be accompanied to a hearing – capped at two weeks’ pay (for this purpose a week’s pay is capped by an amount set by the Government each year).
• Compensation for failing to issue them with a contract of employment – either two or four weeks’ depending on what the tribunal thinks fair (again a week’s pay is capped at an amount set by the Government each year).

Compensation for a successful whistleblowing claim (where there has been a dismissal) is calculated in the same way, but there is no cap on the compensatory award. Where a whistleblowing claim relates to suffering a detriment the award can include an award for injury to feelings (see below).

There can be additional awards if a dismissal is found to be for an automatically unfair reason.

Compensation for discrimination can be made up of:

• Loss of earnings. The purpose of compensation is to put the employee in the same position they would have been in had there not been an act of discrimination. This type of compensation can be for loss of income as a result of losing a job, but could also be to compensate an employee for losses suffered whilst remaining with the employer, for example, for a bonus or pay rise they didn’t receive because of their gender, age, race or another protected characteristic
• Loss of pension rights
• Other financial loss. This could include a loss of benefits in kind or expenses
• An award for injury to feelings. This aims to compensate the employee for the impact an act of discrimination has had on them. There are guidelines for how much compensation can be awarded known as the Vento guidelines. These set out three bands/ranges for awards:
  • Lower band – For less serious cases, such as where the act of discrimination is an isolated or one-off occurrence
  • Middle band – For serious cases, which do not merit an award in the highest band
  • Higher band – For the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment on the ground of a protected characteristic. Only in “the most exceptional case” should an award for injury to feelings exceed the top of this band.

These amounts are increased each April by the Presidents of the Employment Tribunal. The current rates and limits are set out here.

The tribunal will take into account a number of factors when determining the level of compensation including: the vulnerability of the claimant (including any medical condition they are suffering from), the degree of hurt, distress or upset caused (for example any evidence of panic attacks, stress or similar), the impact on the employee’s career, the position of the person who was found to be discriminating, the seriousness of the treatment and the way in which the employer dealt with any complaint raised by the employee.

Calculating compensation in equal pay claims is complex but again the intention is to put the employee in the position they would have been had they been paid the correct rate.

It is worth noting that where an employee is awarded compensation the tribunal can reduce the level of the compensation to take into account the employee’s behaviour (known as contributory fault) or where a dismissal has been found unfair because of a procedural failing it can reduce compensation taking into account the impact following a fair procedure would have had.

A tribunal is also able to increase compensation by up to 25% if an employer has failed to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures. Or it can decrease an award by up to 25% if the employee has failed to follow the procedures.

How a claim is brought

For most employment tribunal claims employees have to start the process of bringing the claim within three months of the date of the act they’re complaining about. For example, if an employee was dismissed on 3rd January they would usually have to start the process by 2nd April.

The first step in this process is for the employee to contact the ACAS Early Conciliation service and inform it that they are considering bringing a claim. ACAS will discuss the background of the claim with the employee (or former employee) and what outcome they want (e.g. compensation) then contact the employer and ask whether they want to discuss a possible settlement. If the employer agrees to have discussions ACAS can spend up to six weeks trying to resolve the issue. If it is resolved both parties will sign up to a COT3 agreement which sets out the settlement and should make clear that the employee can no longer bring a claim relating to that issue, and sometimes covering off other possible claims too. If no resolution is found ACAS will issue a certificate which includes a reference number the employee needs in order to bring a tribunal claim. The employee will then have a finite period of time to issue their tribunal claim or run the risk of not being able to bring a claim.

If the employee goes on to bring a claim the first you will probably hear of it is when the claim form (known as an ET1) arrives on your doorstep. If this happens you will also receive a form to set out your response on (known as an ET3) as well as a covering letter explaining that you have 28 days to lodge your response with the tribunal or you will be prevented from defending the claim. Sometimes you will also receive what are known as “directions” from the tribunal which set out the steps you need to take to prepare for the tribunal hearing (see below) as well as notification of the date the hearing will take place.

When completing the response it is important to respond to each of the legal allegations that are made e.g. to make clear that you deny the claim of unfair dismissal as well as the claims of harassment and discrimination. If you fail to do so you may appear to accept part of the claim. Responding to a tribunal claim is challenging and we recommend that you take legal advice before doing so.

After you have lodged your response to a tribunal claim the tribunal will usually send out ‘directions’ informing the parties:

• When they have to send each other lists of the evidence they have which they believe is relevant to the claim (this includes evidence which is damaging to their own case)
• When they have to agree which documents will be included within a bundle of documents for the hearing
• When they have to exchange witness statements with the other side i.e. send the other side a statement setting out what that person believes happened and when, ideally with reference to any relevant documents in the agreed tribunal bundle.

A date for the hearing will also be provided.

In more complex cases and/or cases where medical evidence is required there may be what is known as a preliminary hearing. This is where a judge meets the parties to agree the timescales for the directions, and/or to discuss/decide a preliminary point, for example, whether someone is disabled and therefore able to claim disability discrimination.

What happens at the hearing?

Depending on the nature of the claim it may be heard by a judge sitting alone or by a judge accompanied by two “lay people” (one from an employee background, the other from an employer background), referred to as a panel. If the claim is heard by a panel, each member of the panel has an equal say in the outcome.

Prior to the hearing starting the employer and employee wait in separate rooms. Whilst they are waiting a tribunal clerk will visit them and ask them to provide copies of the tribunal bundle and witness statements. These will then be provided to the judge or panel. In most cases the judge/panel will not have seen the documents before then. If the documents are lengthy the parties may be informed that there will be a delay whilst the judge/panel review the documents.

When the hearing begins the judge will address the parties and may confirm the issues in dispute. Each side will then set out their case, which involves their witnesses individually giving evidence. The witnesses start this process by swearing that they will tell the truth. Whilst giving evidence the witness will sit at a separate table where they have a copy of their statement and the tribunal bundle. Usually they will not be required to read out their statements, but they will be asked to confirm it is their statement and that it is correct. They will then be asked questions by the other side. As well as being asked questions by the other side, witnesses can be asked questions by the judge/panel, and their own representative can go on to ask them some questions (if it may help their case) in certain circumstances. Which side gives evidence first will depend on the nature of the claim. When one side has given all of their evidence it will be the turn of the other side’s witnesses.

After all witness evidence has been provided each side will usually be given an opportunity to summarise their case and why they should win, known as “closing submissions”. In some circumstances the tribunal may ask that these are provided in writing.

The next step will be for the judge/panel to consider the outcome which they will then present to the parties. Quite often the tribunal does not have time to give its judgment on the same day as the hearing has taken place. If that’s the case the decision will normally be sent out in writing.

If the employee is successful in their claim there will often be a separate hearing to decide how much (if any) compensation they should be awarded. This is known as a remedies hearing. If the employee has not obtained a new role by the time of the hearing the employer can try to show that they should have done so and argue that compensation should be limited to the losses they would have suffered if they had got another job sooner. It is very helpful to have copies of suitable jobs that the employee could have applied for if you want to argue this, which means it’s sensible to collect job adverts from the point the employee is dismissed.

It is possible to appeal against a tribunal decision but only in very limited circumstances.

What are the common mistakes employers make and how do I avoid a claim?

The best way of avoiding claims is to have robust contracts and policies in place and ensure you apply them fairly and consistently.

The most common mistake is not taking advice soon enough, resulting in a failure to do things properly. Sometimes simply failing to follow the correct procedure can result in an employee bringing a successful claim when they would not otherwise have been able to do so.

Once a tribunal process has started the biggest mistakes are failing to respond to the claim in time and/or failing to comply with the tribunal’s directions.

Can I settle a claim once the tribunal process has started?

The simple answer to this is “yes”. A tribunal claim can be settled at any time, and quite often is even settled on the day of the tribunal hearing. The important thing from an employer’s perspective is to make sure that it is settled either by way of a COT3 agreement through ACAS or a binding settlement agreement (such a document must comply with various requirements in order to prevent the employee from continuing with a claim). If it is not done by one of these methods the employee will not be prevented from continuing with their claim. Ideally any agreement will also prevent the employee from bringing any further claims.

Timescales

The time that it takes from taking your initial instructions to the final resolution of your matter depends largely on the stage at which your case is resolved.

If a settlement is reached during pre-claim conciliation, your case is likely to take 4-6 weeks. If your claim proceeds to a Final Hearing, your case is likely to take 18-52 weeks.

This is just an estimate and depends on various factors, including the availability of Tribunal time. We will of course be able to give you a more accurate timescale once we have more information and as the matter progresses.

Key milestones

There are key milestones, which may vary according to individual circumstances. They may be as follows:

• Taking your initial instructions
• Reviewing the papers and advising you on the merits of the claim being brought against you and likely compensation an Employment Tribunal might award if the claim is successful (this is likely to be revisited throughout the matter and subject to change)
• Entering into pre-claim conciliation where this is mandatory to explore whether a settlement can be reached
• Preparing your response to the claim
• Exploring settlement and negotiating settlement throughout the process
• Preparing or considering a schedule of loss
• Preparing for (and attending) a Preliminary Hearing
• Exchanging documents with the other party and agreeing and preparing a bundle of documents
• Interviewing witnesses, drafting statements and agreeing their content with witnesses
• Reviewing and advising on the other party’s witness statements
• Agreeing a list of issues, a chronology and/or cast list
• Preparation and attendance at Final Hearing, including instructions to counsel or conducting the advocacy

Our expert team have years of experience handling both straightforward and highly complex employment disputes at every level, from negotiation and early conciliation through to Employment Tribunal hearings and Employment Appeal Tribunals proceedings.

Our experience includes helping employers in most industries manage the dismissal process or defend tribunal claims, including claims of:

• Wrongful dismissal – where the employee claims that the employer breached their contract
• Unfair dismissal – where the employee claims there was no fair reason for dismissing them or that an incorrect procedure was followed. This includes claims where an employee alleges they should not have been made redundant
• Constructive dismissal – where the employee has resigned claiming that the employer has behaved in a way which is the equivalent of terminating their employment
• Discrimination – where an employee claims they have been dismissed or treated less favourably or unfavourably due to a protected characteristic, for example: sex, age, disability, race, religion, pregnancy/maternity, sexual orientation
• Whistleblowing – where an employee has raised a concern and claims they either suffered a detriment or were dismissed as a result
• Equal pay – where an employee claims they are being paid less than someone from the opposite sex for doing either the same job or one that is equal to it.

Our expert employment lawyers can guide you through each step of the process of dealing with an employment dispute, removing as much stress and uncertainty from the situation as possible. We can help you secure the best available outcome for your business as efficiently and cost-effectively as possible while minimising any negative impact on your commercial interests.

At the outset of the process we can help you understand how strong your defence is, how much compensation may be awarded and how much the process may cost you. This will help you determine how you want to approach things.

If the employee issues a tribunal claim we can help get you through each of the key milestones including:

• drafting your response to the claim (ensuring you cover all aspects of it)
• helping you to think about which documents may support your position and to collate a tribunal bundle
• helping you draft witness statements
• arguing your case for you at the tribunal hearing.

We can also make an application that the other side pay your legal costs if their claim fails.

We appreciate that getting the right result is only one of the concerns when dealing with an employment dispute – protecting your reputation and making sure the matter is dealt with efficiently are often just as important. We therefore tailor our approach to your priorities, making sure we resolve your matter in a way that works for you and your business.

Our fees for defending claims brought against your business for unfair and wrongful dismissal are based on three bands, which we will be happy to discuss with you.

We will advise you of the funding options available to you, for example, using any commercial legal expenses insurance your business is covered by.

There are various items we will consider when deciding what pricing band your case falls into. We will make this assessment and inform you of the relevant fees at the earliest opportunity.

Factors that may influence this include the need for:

• Responding to a claim that has been made against you
• Reviewing documentation received setting out the factual and legal basis of the claim
• Responding to Orders made by the Tribunal
• Any applications to a Tribunal we need to make on your behalf
• Whether an Employment Tribunal Hearing is required

Case Type Range of Costs:

If a solicitor is required to attend a Tribunal hearing there will be a charge of up to £2,400 including VAT (£2,000 + VAT) per day. This won’t normally be necessary where Counsel is conducting the advocacy for you and the case is straightforward

Generally, we allow 2/10 days for a Tribunal Hearing, depending on the complexity of your case.

Disbursements

Disbursements are costs related to your matter that are payable to third parties, such as court fees. We handle the payment of the disbursements on your behalf to ensure a smoother process.

Barrister’s fees, which include preparation, are estimated between £750 (+VAT) to £1,500 (+VAT) per day (depending on experience of the Barrister) for attending a Tribunal Hearing.

*VAT will be changed at 20% or such other rate as prescribed by UK Government from time to time

Exclusions and factors which may make a case more complex

In the event that the issues become more complex, we will inform you at the earliest opportunity and a clear estimate of any extra costs will be provided.

Factors that may lead to an increase in cost include:

• If it is necessary to make or defend applications to amend claims or to provide further information about an existing claim
• Defending claims that are brought by litigants in person (people who don’t have a legal adviser)
• Making or defending a costs application
• Complex preliminary issues such as whether the claimant is disabled (if this is not agreed by the parties)
• The number of witnesses and documents
• If the claim relates to an automatic unfair dismissal claim e.g. if an employee claims they were dismissed after blowing the whistle on your business
• If the claim involves allegations of discrimination