Relationship Between Wrongful and Unfair Dismissal

The statutory concept of unfair dismissal was first introduced in the Industrial Relations Act 1971 [1] . Section 94(1) of the Employment Rights Act 1996 states that ‘an employee has the right not to be unfairly dismissed by his employer’. This right not to be unfairly dismissed and the corresponding right to complain of an unfair dismissal, is only applicable to those who have the relevant employment right.

There are certain stages that need to be addressed when determining whether a dismissal is unfair. These are concerned with establishing the individuals eligibility for protection, showing that a dismissal has taken place and determining the effective date of termination, looking at the reason for the dismissal and finally the question of reasonableness.

Under the Employments Rights Act 1996 only employees have the right to claim unfair dismissal and they must have completed a minimum qualifying period of continuous employment which presently stands at one year ending with the effective date of termination. [2] However, this qualification does not apply if the reason or principle reason for dismissal was automatically unfair. Over the years the length of the qualifying period has fluctuated. It was two years when first introduced, then reduced to six months then increased to one year, then in 1985 was changed back to two years. It was reduced to one year in 1999 as a compromise between the aspirations of unions and the wishes of employers.

Section 95 ERA 1996 specifies the circumstances in which a dismissal takes place. The first of these is when a contract of employment, under which the individual is employed is terminated by the employer.

A tribunal may rule that an employee who resigns because of conduct by his or her employer has been ‘constructively dismissed’.

For a tribunal to rule in this way the employer’s action has to be such that it can be regarded as a significant breach of the employment contract indicating that he or she intends no longer to be bound by one or more terms of the contract: an example of this might be where the employer arbitrarily demotes an employee to a lower rank or poorer paid position. The contract is what has been agreed between the parties, whether orally or in writing, or a combination of both, together with what must necessarily be implied to make the contract workable.

There are occasions when there is a dispute as to whether the individual has been dismissed or whether they have resigned. This was demonstrated in Morris v London Iron and Steel Co Ltd. [3]

A radical alteration to an employee’s contract of employment may amount to a withdrawal of that contract and a conclusion that the employee was dismissed. Hogg v Dover College [4] was an example of this.

The unilateral variation of employee’s contractual working hours may amount to a breach of a fundamental term entitling the employee to resign and claim constructive dismissal.

Section 95(1) (c) ERA 1996 provides that an employee is to be treated as dismissed if the employee terminates the contract of employment as a result of the employers conduct. This is known as constructive dismissal or discharge by breach. [5]

If an employer gives an employee notice of dismissal or terminates the employee’s contact of employment without notice. Then the employee is entitled to be given a written statement giving particulars of the reasons for the dismissal. Dismissals for certain reasons do not require an employee to have worked continuously for a period of one year. [6] These dismissals are for reasons which are automatically unfair. Other instances of automatically unfair dismissal are those which constitute discrimination made unlawfully.

In an action for unfair dismissal, it is for the employer to prove that there were grounds for dismissal, and that in the circumstances the dismissal is fair. [7]

The fair reasons for dismissal have been set out in Section 98 of the Employment Rights Act 1996.  These are as follow:-

Lack of appropriate qualifications or capability: Capability is assessed be reference to skill, aptitude, health or any other physical or mental quality. Assessing capability may well be subjective and an employer will need to be able to show that they had reasonable grounds for belief. [8] In Whitbread & Co Plc v Thomas [9] three employees were dismissed as a result of their lack of competence in failing to prevent stock losses. This was done despite the fact that the employer did not know which of the three might be responsible for the losses. The Employment Acts Tribunal accepted that the employer had fulfilled three necessary conditions as established in Monie v Coral Racing [10] (1) That the act must be such that if committed by an individual would justify the dismissal of that individual (2) The act was committed by one or more of a group, any one of whom could have been capable of committing it, and (3) After a proper investigation, it is impossible to identify which person from among the group is actually responsible [11] .

‘Qualifications’, in relation to an employee, means any degree, diploma or other academic, technical or professional qualification relevant to the position which he held. [12] Such qualifications might include the need for a driving license as in Tayside Regional Council v McIntosh [13] .

Conduct: Whether the conduct justifies dismissal will be a question of fact in each case.  Lying, fighting, theft, or dangerous behaviour would undoubtedly justify a dismissal. Other scenarios such as being rude, or failing to cooperate with management, or drinking on duty, may also be fairly dismissed. [14]

Providing the evidence for an employer’s dishonesty may be a problem for the employer, but if the employer has reasonable grounds for sustaining a genuine belief about the employer’s guilt, after carrying out an investigation, this is likely to be sufficient. [15]

The employee was redundant: An employer must show that the employee has been fairly selected. The Employments Acts Tribunal laid down guidelines for good industrial practice in redundancies in Williams v Compair Maxam Ltd. [16]

The continuance of employment would result in illegality: Section 8 precludes employers from employing an individual who has not been granted leave to enter or stay in the United Kingdom or if his or her stay has conditions attached which stops them from taking up employment. However, a dismissal for the reason that the employer could not lawfully continue to employ someone without contravening a restriction under an enactment is not necessarily fair. [17]

Any other substantial reason: This is a general category which enables the courts to accept reasons that are not related to those in Section 98(2) ERA 1996 as potentially fair. [18]

Reasonableness: Under section 98(4) ERA 1996, the employment tribunal will need to decide whether in the circumstances the employer acted reasonably or unreasonably. This is to be determined in ‘accordance with equity and the substantial merits of the case’. The words ‘equity and the substantial merits’ also allow tribunals to apply their knowledge of good industrial relations practice and to ensure that there has been procedural fairness.

In Polkey v AE Dayton Services Ltd [19] Lord Bridge stated that there might be exceptional circumstances where an employer could reasonably take the view that these normal procedural steps would be futile and could not have altered the decision to dismiss. In such circumstances the test or reasonableness must be satisfied.

The employer must show that he dealt with the problem in a reasonable way in the particular circumstances. It must be shown that dismissal is a last resort, and that the dismissal has not come out of the blue.  It is important to ensure that adequate warnings are given, failing which an otherwise fair dismissal will be rendered unfair [20] .

The Employment Act 2002 introduced a statutory dismissal and disciplinary procedure and a statutory grievance procedure. Section 98A(1) ERA 1996 provides that an employee who is dismissed without the relevant statutory procedure being completed will be regarded as unfairly dismissed if this wholly or mainly because of the employer’s failure to comply with its requirements [21] .

The ACAS Code of Practice was first introduced in 1977 and the current version came into effect in 2004. The code covers disciplinary and grievance procedures and the right to be accompanied. According to the code, management is responsible for maintaining discipline and setting standards of performance within the organisation.

The Employment Rights Act 1996 provides that employees who have been dismissed may request from their employer a written statement of the reasons for their dismissal, which their employer must provide within 14 days. Employees who are dissatisfied because they have not received a statement or believe the statement to be inaccurate may refer the matter to an employment tribunal. All employees with one year’s continuous service with their employer qualify for this right.

Section 32 ERA 1996 provides that should the fault in failing to follow the prescribed procedure lies with the employee, he will be prevented from pursuing a claim for, inter alia, unfair dismissal until the procedures have been complied with or are deemed to have been complied with. This may not appear to be of great significance until one considers a situation in which constructive dismissal may arise. An employee is now precluded from pursuing such a claim until the requirements of the grievance procedure have been fulfilled.

The remedies following a finding of unfair dismissal by an employment tribunal are reinstatement, re-engagement or compensation. Reinstatement in essence means that the employee returns to work as of they had never been away. Re-engagement may mean that the employee is taken back in a different job or the same job but at a different place, or by a new company which is in the same group as her former employer. Compensation is generally made up if two elements: a basic award and a compensatory award. In some cases, an additional award may be payable as well.

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