Welcome to this week’s HR Blast! This week we’re taking a look into one of the most talked about HR topics, dismissals, specifically constructive dismissal.
What is unfair dismissal?
A dismissal could be unfair if you don’t:
- have a good reason for dismissing your employee
- follow the company’s formal disciplinary or dismissal process
Under section 95(1)(c) of the Employment Rights Act 1996, an employee has the right not to be unfairly dismissed by their employer.
What is constructive dismissal?
Employees also have the right to terminate their own employment contract and claim unfair (constructive) dismissal if they can demonstrate poor conduct from their employer amounting to a significant breach of the contract.
The word ‘significant’ is important. Employees can’t bring a constructive unfair dismissal claim if the breach by their employer was trivial. Significant breaches might include:
- Demoting someone for no reason
- Forcing the employee to accept unreasonable changes to work patterns – e.g. requiring full time working from a part timer, where the contract does not allow for that
- Ignoring serious concerns raised by an individual about health and safety in relation to their job
An employer’s breach of contract may be one serious incident, or a series of incidents that are serious when taken together.
Let’s talk about risk…
If you fail to prevent an employee’s resignation and claim of constructive dismissal or fail to follow a fair process in dismissing your staff and/or do not have a fair reason to dismiss, your employee could be awarded compensation for unfair dismissal claim. If you’re unlucky (or careless) a claim of discrimination might accompany this unfair dismissal claim.
The current average compensatory award for an unfair dismissal claim is £16,543, with the potential of the employee being able to claim up to a years’ salary. The maximum award for a breach of contract is currently £25,000. To ensure you have the full picture, typically legal fees could be upwards of £20K and often reach as high as £40K with a complex claim. And this is assuming a discrimination or other claim isn’t added to the original dismissal claim.
A recent case of unfair constructive dismissal
The case of Mrs A Fletcher v Countryside Estate Agents saw Mrs A Fletcher being awarded more than £60,000 by the Cambridge Employment Tribunal for unfair constructive dismissal.
In this case, Mrs Fletcher’s employment as an office manager was originally with Ashby Lowery however, that Company was sold to Countryside Estate Agents and Mrs A Fletcher’s employment transferred across to this new employer.
Mr Wilson acknowledged Mrs A Fletcher was his number two and someone who had considerable autonomy to conduct business in the manner she believed was best and in the best interests of clients and staff. She had been important in helping Mr and Mrs Wilson create Northampton’s most successful letting and property management business. Mrs A Fletcher was the ‘go to’ person for all staff on any office management issues that they had.
Mr Wilson told his managers (including Mrs A Fletcher) about the likely sale of the business in the summer of 2015. However, there were no meetings with staff to discuss the implications of such a sale.
Before the sale things were fine. But after the sale, things went down-hill due to a number of problems for the office in applying the Countrywide office processes to the acquired business. It led to serious and persistent issues over the payment of salary to staff, pensions and enrolment into the Countrywide pension scheme, expenses and in relation to the payment of supply invoices. Mrs Fletcher did not suffer any salary or pension difficulties but she did have to answer more than 700 complaint emails in four months. However, when she sought help, “she was told, in effect, to deal with it”. Mrs A Fletcher attempted to speak with her boss to discuss the issues she was facing and reported that he was “rude and dismissive”.
Mrs A Fletcher resigned from her employment whilst she was on holiday, citing lack of support and a belief that this would continue and the derogatory and hostile conduct of her boss.
The Employment Judge said the behaviour of the company “amounted to a very substantial erosion of trust and confidence, and of the employment relationship. It was a fundamental breach of contract. He said that the Company should have welcomed her input, and tried to engage with the staff to raise their morale and sort out their issues. He said the hostility made Mrs A Fletcher frightened and fearful for her own position.
On 5 February 2018, Countrywide was ordered to pay Mrs A Fletcher a total of £60,252, made up of a basic award of £8,622.00 and a compensatory award of £51,620.
What went wrong?
In legal terms: The employee’s complaints were not taken seriously. She received no support from her employer in complete disregard for the employer’s duty of care. This led to a breakdown of trust and confidence which must exist in the employment relationship.
In human terms: People want to be listened to. If they raise a complaint they expect to be treated with respect. Any merger of two businesses has to be handled carefully and with consideration to how the staff are affected. Mess up the employee relations and the whole business transfer can be undermined.
What should have been done: It is vital to manage complaints from staff, treating them as grievances, investigating them and taking them seriously. It is important to be proactive and to be able to demonstrate that you have supported the employee in order to avoid the employee resigning as a result of what was here described as a ‘hostile’ environment.
Jaluch Tips and Guidance on Disciplinary Procedures
Here are some of our top tips on conducting disciplinaries to help you avoid receiving an unfair dismissal claim!
- Investigation is key – you’ll need to investigate the allegations looking at evidence that either upholds the allegation but also evidence that doesn’t uphold the allegation
- Allow time for the employee to prepare for the meeting – we usually advise 48-hours at minimum but more time can be allowed if there is no harm in authorising it
- Remember an employee has a statutory right to be accompanied at a disciplinary hearing by a colleague, an accredited trade union representative or a union official who has been approved by the union to act as a companion
- Don’t make a decision at the disciplinary hearing without demonstrating you have taken the time to hear what the employee has to say – an adjournment is vital!
We have plenty of commercial tips and advice to give on handling disciplinaries so if you need support give our team of highly experienced consultants a call! 01425 479888
Jaluch conduct coaching and training for managers in disciplinaries and dismissals and so if you and your team need experience, a refresher or top-up in this area then please feel free to contact us for support.
If you need further guidance around dismissals, then you might find what you’re looking for in our previous articles:
Disclaimer: The information contained within this article is for general guidance only and represents our understanding of employment and associated law and employee relations issues as at the date of publication. Jaluch Limited, or any of its directors or employees, cannot be held responsible for any action or inaction taken in reliance upon the contents. Specific advice should be sought on all individual matters.