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Legal guidelines for a fair dismissal

These legal guidelines are intended to provide a general guide for managers who are handling potential dismissal cases involving either misconduct or sickness absence. The guidelines cover both the disciplinary and appeal stages. They are intended as guidance and we would recommend that before dismissing an employee advice should be sought from your designated advisor.

Ways of dismissing

Termination on notice

An employer and an employee are both entitled to terminate the employment contract by giving the requisite contractual period of notice. If an employer gives the requisite notice then the employee has no contractual entitlement to damages for breach of contract.

However, there are two notes of caution here:

  1. in very limited circumstances an employee may be able to recover “stigma damages” if he can show that the behaviour of the employer, prior to the dismissal, has irretrievably damaged his professional reputation;
  2. even though an employer may give the requisite period of notice the dismissal may – depending upon the circumstances – still be deemed unfair (see below).

Summary dismissal

An employer or an employee is entitled to terminate the employment contract, without giving notice, if the other party has been guilty of a “repudiatory” breach of the contract, i.e. a very serious breach which fundamentally undermines the employment relationship. For example, an employer is usually entitled to summarily dismiss an employee in cases of gross misconduct such as theft. However, even where there are good grounds for a summary dismissal it does not mean that this will be a fair dismissal and a procedure needs to be followed.

Where an employee resigns in response to an employer’s repudiatory breach they may be able to claim that they have been constructively dismissed. This will not give rise to a statutory claim in itself but may enable an employee to claim unfair dismissal.

Common statutory claims

Wrongful dismissal

If, an employer dismisses an employee without giving the requisite contractual notice, and in the absence of a repudiatory breach of contract by the employee, then this would be a “wrongful” dismissal. The employee would be entitled to sue the employer in the Tribunal or the County Court for damages for breach of contract. Damages are typically limited to a maximum of the pay and other benefits that the employee would have received during the notice period, although the employee has a duty to mitigate his loss, i.e. he or she must seek other work.

Unfair dismissal

In addition to any contractual rights on termination, an employee has — subject to certain qualifying criteria — a statutory right not to be unfairly dismissed. (There are various other statutory rights owed by an employer to an employee and which a manager may have to consider when dealing with a case, such as the right not to be discriminated against on the grounds of sex, race or disability. However, these guidelines deal only with unfair dismissal.)

The right not to be unfairly dismissed

The Employment Rights Act 1996 (“ERA”) gives employees the right not to be unfairly dismissed, subject to satisfying certain pre-conditions. An employee who believes that he or she has been unfairly dismissed may complain to an Employment Tribunal.

When an employee lodges an unfair dismissal claim with an Employment Tribunal, the first issue for the Tribunal will be to establish whether there has in fact been a dismissal. In most cases, save for when the employee resigns and claims constructive dismissal, this is not in dispute.

The tribunal must then decide:

  • that the reason was one of the potentially fair reasons for a dismissal (as set out in Section 98 ERA);
  • that the employer adopted a fair procedure when dismissing the employee; and
  • that the decision to dismiss was a reasonable one.

Pre-conditions for bringing an unfair dismissal claim

To be eligible to bring an unfair dismissal claim, an employee must:

  1. have been an employee of the Respondent employer (e.g. self-employed contractors do not have this right);
  2. have been dismissed (which includes constructive dismissal and the expiry of a fixed term contract which is not renewed);
  3. and have completed at least one year of continuous employment (for employment commenced prior to 6 April 2012 and 2 years service for employment after that date) ending with the date on which the dismissal took effect. (However, in certain circumstances an employee needs no such minimum qualifying period of continuous employment: examples include where the dismissal is for a reason relating to trade union activities, is maternity-related, or is the result of an employee asserting a statutory right — see below).

A tribunal can only find a dismissal to be fair if it is for one or more of the five reasons set out in Section 98 ERA, namely: capability, conduct, redundancy, some other substantial reason or statutory limitation ('illegality). Once a dismissal has been established by the employee, it is then for the employer to demonstrate the reason (or, if there is more than one, the principal reason) for the dismissal;

It is therefore essential for the manager who is handling the case to identify at the outset the precise reason why the employee is being considered for dismissal and to ensure that the correct procedure is being followed.

However, dismissals for certain reasons are deemed to be automatically unfair, including:

  • where an employee was dismissed for becoming a union member or for taking part in union activities at an appropriate time;
  • where an employee was dismissed for asserting his statutory rights (for example pursue a claim of unlawful deduction of wages);
  • where dismissals relate to family rights (e.g. where the reason for the dismissal relates to the employee’s pregnancy, maternity or the taking of paternity or parental leave);
  • where the reason for the dismissal relates to the employee having made a protected disclosure (‘whistleblowing’).

Fairness

If the employer establishes that the reason for the dismissal is one of the potentially fair reasons set out above, the Tribunal will then proceed to determine whether the dismissal was fair or unfair in all the circumstances.

The general approach

The basic test is set out in Section 98(4) ERA, which explains that:

“…whether the dismissal was fair or unfair (having regard to the reason shown by the employer) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating [the reason] as a sufficient reason for dismissing the employee…and [that question] shall be determined in accordance with equity and the substantial merits of the case.”

It is not for the Tribunal to substitute its own opinion for that of the employer. Instead, its job is to determine whether the employer has acted reasonably in the light of the circumstances known at the time of the dismissal. The test of whether or not the employer acted reasonably is an objective one, and the approach which is followed by tribunals is known as the “band of reasonable responses” test:

“...in many (though not all) cases there is a band of reasonable responses to the employee’s conduct within which one employer might reasonably take one view, another quite reasonably take another; the function of the [Employment] Tribunal, as an industrial jury, is to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses...if the dismissal falls within the band it is fair; if the dismissal falls outside the band it is unfair.” (Iceland Frozen Foods v Jones).

Thus an Employment Tribunal must not ask itself whether it thinks that the employer did the “right” thing, but should instead recognise that different employers may reasonably act in different ways to a particular situation.

Relevant factors

The size and resources of the employer’s undertaking

The size of an employer is most often a relevant factor where there is an issue as to whether alternative employment should have been offered. Whilst this issue typically occurs in cases involving redundancy, sickness absence or disability, it can also be a relevant factor in a misconduct case. For example, where employees are employed by a Group company but work within one of a number of subsidiary companies or business units, it may be necessary to consider redeployment anywhere within the Group as an alternative to dismissal.

ACAS Code of Practice

Guidance on procedural fairness is contained in the ACAS Code of Practice on Disciplinary and Grievance Procedures. Tribunals are obliged to take the relevant provisions of the ACAS Code into account when dealing with cases and thus a failure to follow a procedure prescribed in the ACAS Code of Practice may lead to the Tribunal concluding that a dismissal was unfair. There may also be an increase (or decrease) in any compensation awarded by the Tribunal of up to 25% if either the employer (or employee) unreasonably fails to comply with the ACAS Code. The ACAS Code can be downloaded from the ACAS website.

Length of service and conduct record

A Tribunal will generally expect a long serving employee and/or an employee with a good record to be given greater chance to improve. This may not apply when the offence is one of gross misconduct although a previously long and unblemished record will instigate closer scrutiny by the Tribunal.

Consistency of treatment

Tribunals expect an employer to treat its employees consistently, e.g. similar cases of misconduct should result in similar penalties. Inconsistent treatment alone can render a dismissal unfair, e.g. where the employer has on other occasions dealt more leniently with similar misconduct. It is not a good argument for the employer to say that any inconsistent treatment was because different managers dealt with the separate incidents.

Case law (and notably Hadjioannou v Coral Casinos Ltd [1981]) explains that whilst the emphasis should be on the particular circumstances of the individual employee’s case, an argument of inconsistent treatment may be relevant in determining the fairness of a dismissal in one of three scenarios:

  • if there is evidence that employees have been led by an employer to believe that certain categories of conduct will either be overlooked, or at least will not be dealt with by the sanction of dismissal; 
  • where evidence in relation to other cases supports an inference that the reason given for the dismissal by the employer is not the real reason; or
  • evidence as to decisions made by an employer in truly parallel circumstances may be sufficient to support an argument, in a particular case, that it was not reasonable for the employer to dismiss the employee for the particular conduct and that some lesser penalty would have been appropriate in the circumstances. 

However, the Court in Hadjioannou also went on to warn Tribunals that they should scrutinise arguments of inconsistent treatment with particular care: there will not be many cases which are truly similar, or sufficiently similar, to afford an adequate basis for argument; further, the Court commented that it is of the highest importance that flexibility should be retained and that employers and Tribunals should not be encouraged to think that a tariff approach to misconduct is appropriate.

Two practical consequences of this issue for employers are:

  • where revised standards are to be applied then it is essential for the employer to make clear to all employees before the change that misconduct of the kind in question is very serious and may (where appropriate) now lead to dismissal — even if it did not previously do so; and
  • if an employee makes an allegation of inconsistent treatment then he or she should be asked to name the alleged comparators and an investigation should be made as to the circumstances in which the other case(s) was/were handled. Experience shows that in many cases there will be factors which distinguish the comparator case(s) and so undermine an argument over inconsistent treatment.

If there is, on the face of it, inconsistency the employer must be able to demonstrate either that the cases are different or that there is a particular factor or factors relating to one case but not the other that explains the difference in approach.

Adopting a fair procedure

The Tribunal will take into account not only whether the employer had a fair reason for dismissing the employee but also whether a fair procedure was adopted by the employer when carrying out the dismissal. In this respect, the Tribunal will have regard to:

  • the ACAS Code of Practice;
  • the employer’s own internal procedures; and
  • general principles of fairness (often arising out of earlier case law).

General principles of fairness

Whilst the specific procedure to be followed will depend upon the reason why dismissal is being considered, there are some important general principles which should be adhered to in order to ensure that a dismissal is procedurally fair:

  • the employer should have an established and well publicised procedure which should be followed;
  • when dealing with poor performance, appropriate warnings should be given when problems first emerge;
  • warnings (and all stages leading up to the consideration of dismissal) should be properly recorded in writing;
  • there should be adequate notice given of a disciplinary hearing;
  • prior to any disciplinary hearing, the employee must be notified of the substance of the complaint, the reason why their dismissal is under consideration and he or she should be provided with copies of all the documentation and evidence upon which the employer will be relying. (There are some cases in which there may be a concern about disclosing documents, e.g. where there is a wish to maintain a witness’s anonymity because of the fear of reprisals. Specific considerations apply in these circumstances and it is recommended that legal advice be sought in each case);
  • the employee must be notified, prior to any consideration of dismissal hearing, that dismissal may be an outcome if the complaint is found to be proven;
  • the employee must have an adequate opportunity to comment upon the evidence;
  • the manager with responsibility for taking the decision to dismiss or determine the appeal must not be influenced by others;
  • the employee should be given the opportunity, where practicable, to appeal to a more senior level of management not previously involved.

When considering whether an employer has followed a fair procedure, the Tribunal will ask whether the procedure itself, and how it was followed, fell within the “band of reasonable responses”. Again the emphasis is not on what the tribunal itself might consider to be a fair procedure, but on whether the procedure is one that a reasonable employer might have followed in these circumstances.

Curing defects at the appeal stage

Until recently, if an earlier part of the dismissal process had possibly been defective then only an appeal by way of a rehearing, as opposed to a review, could cure such earlier defects. Recent case law has now indicated that what matters is not whether an internal appeal is technically a rehearing or a review, but whether the disciplinary process as a whole can be considered to be fair. If a Tribunal feels that an early stage of a process was defective and unfair in some way then it will want to examine any subsequent proceedings with particular care. Their purpose in doing so will be to determine whether, notwithstanding any deficiencies at an earlier stage, the overall process was fair in light of the procedures adopted, the thoroughness of the process and the open-mindedness of the decision-maker.

On a practical level, an appeal which takes the form of a re-hearing, at which an employee is free to present new submissions and new evidence, and at which the appeal manager considers the whole of the case and comes to his/her decision afresh, is more likely to cure any potential earlier defects. This is certainly the approach we would recommend if there is any doubt about the conduct of the initial disciplinary hearing.

The role of the companion

An employee has the right to reasonably request to be accompanied by a trade union representative or work colleague (from any location) at meetings considering or appealing a formal disciplinary sanction. The companion, in addition to being allowed to confer with the employee during the hearing, must be allowed, if the employee wishes, to address the meeting in order to:

  1. put the employee's case;
  2. sum up that case;
  3. respond on the employee's behalf to any view expressed at the hearing.

However, the companion is not allowed to answer questions on behalf of the employee. Also, the companion must not at any time exercise any of these rights in an obstructive way. Where the employee’s chosen companion cannot attend on a proposed date, the employee can suggest an alternative time and date so long as it is reasonable and no more than five days after the original date. If the chosen representative cannot attend at the alternative date the employee must find another representative.

Misconduct dismissals

The Court of Appeal provided guidance for employers investigating misconduct in the leading case of British Home Stores Ltd v Burchell, explaining that:

  • first the employer must establish that, as a matter of fact, it believed in the employee’s guilt;
  • secondly, the employer must show that it had in its mind reasonable grounds upon which to sustain that belief; and
  • thirdly, the employer must have carried out as much investigation into the matter as was reasonable in all the circumstances of the case at the stage at which it formed its belief on those grounds.

Each of the three elements of the Burchell test is commented on below. The Burchell test only applies where the employee disputes the misconduct. If he or she admits the misconduct then there is no need to investigate the actual misconduct any further (although proper consideration of the circumstances of the misconduct would need to be taken into account when deciding the appropriate penalty and may therefore require some investigation).

Belief in the employee's guilt

The manager who is handling the case must personally believe that the employee is guilty of the alleged misconduct and, as a result, have lost confidence in his/her integrity and reliability. It is not necessary to prove the employee’s guilt beyond all reasonable doubt. The manager must simply believe that it is more likely than not that the employee committed the alleged misconduct.

Reasonable grounds for that belief

The employer will not be acting reasonably if his/her belief is not supported by some objective evidence. Whether or not the employee did in fact commit the misconduct is strictly speaking irrelevant. The question is whether the employer, at the time of the dismissal or at the conclusion of any appeal, reasonably believed that the employee committed the act of misconduct. In this regard:

  • evidence which comes to light after the dismissal or any subsequent appeal is not admissible in the Tribunal, even if it supports the employee’s innocence. Hence a dismissal may be fair even though a criminal court subsequently decides (i.e. after the dismissal and the conclusion of any appeal) that the suspected offence was not committed. When considering the fairness of a dismissal, the Tribunal is concerned with what the employer knew at the time of the decision to dismiss or when reaching the appeal decision. (Of course, when considering the appeal an employer must take into account any evidence which may have come to light since the dismissal);
  • further, it is not necessarily unfair for an employer to take disciplinary proceedings and to dismiss even after an employee has been acquitted in criminal proceedings. Remember that for a criminal conviction guilt must be proven beyond reasonable doubt, whereas for a fair dismissal the employer must only be satisfied as to the employee’s guilt on a balance of probabilities i.e. the dismissing manger thinks it more likely than not that the employee is guilty of the misconduct;
  • where there is suspicion about two or more employees, an employer may exceptionally be justified in dismissing both. A reasonable belief that one of the two has committed the misconduct may be sufficient where it is impossible to determine which one. Before dismissing in these circumstances the employer must have carried out a thorough investigation. Such dismissals are usually fair because the employer has to take action to protect his/her own interests (although it is recommended that legal advice be sought before a decision is reached);
  • it is the manager’s own knowledge that is relevant to determining reasonable belief. It is not taken for granted that the manager will have the same knowledge as the employee or other managers of the employer.

Reasonable investigation

The amount of investigation required depends upon the extent of the evidence available to the employer. The following factors should be emphasised:

  • the employer must make proper enquiries to determine the facts: for example, it would not be fair to dismiss the employee merely because he has been charged with a criminal offence. The employer must wait until sufficient information becomes available to enable it to form a reasoned decision as to the employee’s guilt and even then the offence must be relevant to the employee’s work to justify dismissal;
  • the employer must carry out its investigations promptly: if there is an unreasonable delay then a dismissal may be found to be unfair;
  • the employee must have an opportunity of knowing what case he or she has to meet. It is essential for the employer to explain exactly and without ambiguity what it believes that the employee has done wrong;
  • the employee must be given an opportunity to state his/her case and should be permitted to make any representations that he or she wishes. The significance of this is two-fold: it will help the employer to establish whether or not the relevant misconduct has been committed and it will bring out any mitigating circumstances;
  • the disciplinary interview / appeal hearing must be held by the person who ultimately decides the dismissal / appeal. If the employee raises matters which require further investigation then this must be undertaken and the results thereafter explained to the employee. The employee’s verbal or written comments should be sought upon any new information obtained as a result of the further investigation and before a final decision is reached.

Is dismissal a fair sanction in a misconduct case?

If it is concluded that the accused employee committed the misconduct, the next step is to consider as a separate matter whether dismissal is the appropriate penalty. Although it is not for the Tribunal to substitute its own view of the appropriate penalty for that of the employer, it will consider whether the decision to dismiss fell within the band of reasonable responses open to the employer.

Save in the circumstances mentioned below, no employee should be dismissed for a first breach of discipline. Thus warnings would normally be appropriate in order that the employee might have an opportunity to change and improve.

However, dismissal for a first offence may be justified in two circumstances:

  • where the act of misconduct is so serious (gross misconduct) that dismissal is a reasonable sanction to impose, notwithstanding the lack of any history of misconduct; or
  • where the employee has made it clear that he or she is not prepared to alter his or her behaviour or attitude, such that a warning would not lead to any improvement. Before dismissing in these circumstances it would be advisable to seek advice from your designated advisor.

An employer will normally find it easier to justify a dismissal for a particular single act of misconduct where a rule (that has been previously brought to the employee’s attention) explicitly states that the breach may lead to dismissal.

Where an employee already has a current final warning or period of disciplinary suspension on his or her record, the first step is to undertake the normal disciplinary process for dealing with the current allegation of misconduct to establish the guilt or otherwise of the employee. Even if a second serious offence is established, the final warning / suspended dismissal should not automatically trigger the employee’s dismissal: the employee must be given the opportunity to state his or her case as to why the final warning / suspended dismissal should not be invoked and all of the circumstances of the case must be considered.

Finally a Tribunal will normally only consider a dismissal to be fair if it can be shown that alternatives were considered but for good reasons were found to be inappropriate. It would be prudent to include as part of the reasoning for the dismissal that a lesser penalty was considered and why it was felt to be inappropriate.

Miscellaneous misconduct issues

Ensure that the applicable standards are well known

It is a statutory requirement that employees are made aware of the disciplinary rules and procedures that apply to them. It is important therefore that management should make every effort to ensure that employees know and understand them (including employees whose first language is not English or who have a disability or impairment such as an inability to read). If an employee suggests that he or she was not aware of relevant standards of behaviour then the manager must investigate this claim rather than assuming that the employee had all of the relevant information available to him or her. If this is in dispute at the disciplinary hearing, the employer should produce evidence to demonstrate that the disciplinary rule or standard was made known to the employee.

Some kinds of misconduct are so obviously well known that there is no need for them to be spelt out. For example, there is no need to spell out that employees must be honest and that any dishonesty is likely to result in dismissal; nor that an employee should not assault his/her manager or colleagues. That said, if a disciplinary rule is well known then it is easier to justify a dismissal. It is good practice to periodically review the organisation’s internal disciplinary rules and procedures to ensure that the categories of misconduct are up to date and flexible enough to cover a range of possible disciplinary situations EXAMPLE DISCIPLINARY PROCEDURE.

Criminal offences committed away from work

The basic principle (reflected in the ACAS Code of Practice) is that criminal charges or convictions outside employment should not be treated as automatic reasons for disciplinary action. The main consideration should be whether the offence / alleged offence is one that makes the individual unsuitable for his or her type of work or unacceptable to other employees or customers. Employees should not be dismissed solely because a charge against them is pending or because they are absent through having been remanded in custody.

To be a sufficient reason for dismissal, criminal conduct must affect the business or undermine the employer’s confidence in its employee. It is difficult to advise generally when criminal conduct outside of work will have this effect. It will depend upon a variety of factors including the nature of the offence, the nature of the work to be done, the extent to which the work involves contact with other employees or the general public, and the status of the employee, etc. For example, if a care worker in a children’s home is convicted of possessing indecent images of children then this will clearly impact upon the employment relationship.

Even if an employee is convicted and imprisoned, this may not automatically justify a dismissal. The nature of the job, the offence and the length of the sentence would have to be considered before dismissing.

Detailed guidance on the issue of criminal charges or convictions is contained in the ACAS guide to discipline and grievances at work which accompanies the ACAS Code of Practice.

Overlapping criminal proceedings for offences committed at work

As a general rule, an employer may undertake its disciplinary procedures independently of any criminal proceedings. However:

  • no internal conduct proceedings should be conducted without having first established the potential impact of an internal investigation on any such criminal proceedings. It is recommended that legal advice be sought before commencing an internal case where it is known that a criminal investigation is proceeding or might be likely; and
  • it remains necessary to treat all cases on their merits. If there is insufficient evidence available then disciplinary proceedings should not be started. If the criminal case will be completed in the reasonably near future then it may be unfair not to await the outcome of the trial.

Ill health dismissal

Please also refer to the HR Rely guidance on managing sickness absence GUIDE TO ATTENDANCE MANAGEMENT.

Introduction

Ill health can provide grounds for dismissal in a number of ways:

  • first, there may be exceptional circumstances where the employee is incapable of doing the job because the nature of the job itself brings about the illness (this scenario raises health & safety issues);
  • secondly, continuing but intermittent absences through illness may result in dismissal; and
  • finally, the employee may have an extended absence because of ill health and there will come a point when the employer can fairly dismiss him. If the pension scheme allows it this may also result in an ill health early retirement.

Where there is an ill health dismissal, the starting point for analysing whether or not the dismissal is fair is the Employment Appeal Tribunal’s (“EAT”) decision in Spencer v Paragon Wallpapers Ltd [1976] IRLR 373, [1977] ICR 301:

“Every case depends on its own circumstances. The basic question which has to be determined in every case is whether, in all the circumstances*, the employer can be expected to wait any longer and, if so, how much longer?...”

*The relevant circumstances include: “…The nature of the illness, the likely length of the continuing absence, [and] the need of the employer to have done the work which the employee was engaged to do…”

Thus there is essentially a conflict between the needs of the business and those of the employee, and the tribunal must be satisfied that the employer has sought to resolve that conflict in a manner which a reasonable employer might have adopted. The employer must demonstrate that it carried out an investigation which meant that it was sufficiently informed of the medical position. Thus in cases involving ill health absenteeism, Tribunals tend to focus on two key areas:

  • was the employer adequately informed; and
  • was the decision to dismiss reasonable in the light of the information?

Was the employer adequately informed?

Employers should typically seek all relevant background information from both the employee and any medical adviser (although in the case of unconnected, intermittent sick absences there may be limited value in seeking a medical opinion).

The employer may need to ask the employee to submit to a medical examination, although an employer cannot apply to a medical practitioner for a report without the employee's consent (see section 3(1) of the Access to Medical Reports Act 1988). (A 'medical report' in this context is a report from a medical practitioner who is or has been responsible for the clinical care of an individual). The employee's consent will be required before any medical examination can be made (see below).

Consultation with the employee

In East Lindsey District Council v Daubney [1977] IRLR 181, [1977] ICR 566, the EAT stated that:

“…Unless there are wholly exceptional circumstances, before an employee is dismissed on the ground of ill health it is necessary that he should be consulted and the matter discussed with him, and that in one way or another steps should be taken by the employer to discover the true medical position….Discussions and consultation will often bring to light facts and circumstances of which the employer was unaware, and which will throw new light on the problem. Or the employee may wish to seek medical advice on his own account, which, brought to the notice of the employers' medical advisers, will cause them to change their opinion. There are many possibilities. Only one thing is certain, and that is that if the employee is not consulted, and given an opportunity to state his case, an injustice may be done…”

The onus to keep in touch is on the employer: the employee is not under an equivalent obligation to provide information to the employer, although a lack of co-operation by an employee may not help their case if the subsequently complain of unfair dismissal.

Consultation with medical advisers

Although a decision about whether or not to dismiss for ill health is not purely a medical question, so that consultation with a medical adviser is not generally sufficient on its own to justify a fair dismissal, it will often be a necessary step for the employer to take. It all depends on the particular circumstances. Sometimes a tribunal may feel that the medical position has been adequately established following consultation with the employee himself; in other cases the employer ought to consult one or more appropriate medical advisers about the state of the employee's health. It is almost always safer to seek a medical opinion.

In cases of uncertainty the employer should request the employee to submit to a medical examination before reaching his decision - and sometimes this may be examination by a specialist. For example, in Crampton v Dacorum Motors Ltd [1975] an employer was found to have unfairly dismissed an employee when he relied on the tentative diagnosis of a General Practitioner. The Employment Tribunal said that although the decision was taken in good faith, nevertheless it was reached too hastily and that the employer should have invited the employee to submit to a further examination by a specialist.

Further, in the disability discrimination case of Gallop v Newport City Council [2013] the Court of Appeal held that the employer was wrong to have 'unthinkingly' followed an Occupational Health Advisors opinion. While occupational health assessments or other advice may be helpful, the court made clear that a responsible employer must ultimately apply its own mind to issues relating an employee's ill-health (for example, whether they are able to continue in employment, or whether they meet the definition of disability for the purposes of Equality Act 2010). 

If the employee refuses to agree to a request to be medically examined (and the employer has no inherent power to compel him or her to undertake such an examination) then the employer will have to act on the basis of those facts which are at its disposal. This may mean that a dismissal for ill health will be fair even though had a medical opinion been available it would have been unfair. The employer cannot insist on the examination: to attempt to do so without an express contractual power is likely to constitute a repudiatory breach of contract which will entitle the employee to resign and allege that he or she has been constructively and unfairly dismissed.

In most cases an employer who dismisses in accordance with medical advice will be acting fairly. However, the employer will have to satisfy the tribunal that an appropriate medical expert was properly and fully advised as to the relevant background material, otherwise the tribunal will be entitled to hold that the investigations have been inadequate and that the dismissal is accordingly unfair.

Conflicting medical opinions

Where an employer is faced with conflicting medical advice he will not necessarily be acting unfairly if he accepts the report which is less favourable to the employee and dismisses him or her. Whether this is reasonable will depend on a variety of factors, especially the nature of the risk involved in retaining the employee at work, both to the employee him or herself and to the business.

Obtaining other expert advice

Occasionally it may be necessary for an employer to consult someone other than a doctor and the employee himself before taking a decision to dismiss on ill health grounds. For example, and particularly in cases involving disability, an employer might need to seek input from other experts such as those with a particular knowledge of adaptive equipment that might enable better attendance at work, and health and safety experts who might be needed to advise on the safety of a particular workplace adjustment.

Was dismissal a fair sanction?

Generally relevant factors

There are a variety of factors to be weighed up in considering whether the decision to dismiss is reasonable. These include the following (and the weight to be given to a particular factor will vary from situation to situation):

i) The nature of the illness and the job: for example, if an employee has an illness which makes him a danger to his fellow workers then that will be a relevant factor. Indeed, the mere risk of illness could justify a fair dismissal where it made it unsafe for the employee to continue in the job, e.g. a risk of heart attack to a sole wireless operator on a sea-going ship;

ii) The needs and resources of the employer: for example, in some cases the need for an employee with robust health is especially strong; also, the need for the employer to get a replacement will be greater where the business is small and the work cannot be readily absorbed by other employees;

iii) The effect of the absences on other employees: e.g.

  • the fact that they may have to work overtime to make up for the employee’s absence;
  • where employees work in a team and an absence can affect the earnings of other workers;
  • where an employee has a recurring illness which has a disruptive effect on other employees at work;

iv) The likely duration of the sick absence: e.g. where, after a reasonable period of time, the employee , their GP or specialist are still unable to say when he or she is likely to be able to return. The employer must balance the needs of the employer to have someone working and the need of the employee to have a job to return to when he has recovered. The nature of the job, the length of the absence and the cost to the employer of the absence will be relevant factors. The employer should seek advice before dismissing in these circumstances;

v) How the illness was caused: if the job makes an illness worse then this will clearly reinforce the justification for dismissal. However, if the illness was caused by the job or by the employer's treatment, the employer will be expected to show greater latitude towards the employee than he might otherwise (see below);

vi) The employee’s length of service;

vii) Was there suitable alternative employment? An employer will find it difficult to claim that it has acted reasonably if it takes no steps to try and fit the employee into some other suitable available job. The question of whether an alternative job should have been offered is primarily one of fact for the tribunal. This is one of the areas in which there is significant overlap with the obligations owed by employers towards disabled employees under the Equality Act 2010 (“the Act”): where an underlying medical condition is such as to render the employee disabled under the Act, the duty to consider suitable alternative employment falls within the duty to make reasonable adjustments. There is no obligation to create vacancies but in some cases where an employee is disabled their call on alternative jobs should not be secondary to others looking for alternatives, eg, those at risk of redundancy.

Factors specific to the type of ill health case

As mentioned earlier, ill health can provide grounds for dismissal in a number of ways:

  • first, it may exceptionally result in the employee being incapable of doing the job because the nature of the job itself brings about the illness;
  • secondly, continuing but intermittent absences through illness may result in dismissal;
  • finally, dismissal may result from an extended period of sickness absence (often via ill health retirement, depending upon the circumstances).

Whilst the general factors set out above will be applicable in all three scenarios, there are some issues which are specific to each.

i) Ill Health Caused by Work:

Such cases are comparatively rare, but can for example occur where a person is particularly susceptible to some workplace factor such as fumes, and where there are no reasonable steps which the employer can take which would eliminate the problem. (Health and safety will obviously be a significant issue in such circumstances).

ii) Intermittent Absences:

In Lynock v Cereal Packaging Ltd, the EAT described the appropriate response of an employer faced with a series of intermittent absences as follows:

  • The approach of an employer should be based on sympathy, understanding and compassion.
  • There is no principle that the mere fact that an employee is fit at the time of dismissal makes his dismissal unfair: an employer must look at the whole history and the whole picture.
  • Every case must depend upon its own facts. The factors which may prove important include:
    • the nature of the illness;
    • the likelihood of recurrence or some other illness arising;
    • the length of the various absences and the spaces of good health between them;
    • the need of the employer to have the work done by the particular employee;
    • the impact of the absences on others who work with the employee;
    • the fulfilment by the employer of any relevant sickness absence policy;
    • the importance of a personal assessment in the ultimate decision; and
    • the extent to which the difficulty of the situation and the position of the employer has been explained to the employee, so that the employee realises that the point at which his or her dismissal will be contemplated may be approaching.

Generally relevant factors

In order for a dismissal for intermittent absences to be fair, the leading case of International Sports Co. Ltd v Thompson (1980) established that the following must be satisfied:

  • there should be a fair review by the employer of the attendance record and the reasons for it;
  • there should be appropriate warnings after the employee has been given an opportunity to make representations;
  • if there is no adequate improvement in the attendance record then in most cases the employer will be justified in treating persistent absences as a sufficient reason for dismissing the employee.

In the same case the EAT also said that, in the case of intermittent absences: “…It would be placing too heavy a burden on an employer to require him to carry out a formal medical investigation and, even if he did, such an investigation would rarely be fruitful because of the transient nature of the employee's symptoms and complaints…”

iii) Dismissals for Long-Term Sick Absence:

The relevant considerations in long term sick absence cases vary to some extent from those for intermittent sick absence cases. There is a much greater emphasis on the employer consulting with the employee directly and with relevant medical advisers so as to ensure that any decision is an informed decision. In addition, it will be incumbent upon the employer to consider whether there is any alternative employment which might be offered to the employee, so as to avoid his or her dismissal.

If an individual is sufficiently ill such as to result in a long term sick absence, then there must be a possibility that his/her condition might amount to a disability for the purposes of the duties owed by an employer under the Act. It is always advisable to ask the employer’s Occupational Health Adviser whether or not the individual would be likely to be disabled for the purposes of the Act. (Detailed guidance about the responsibilities of employers towards disabled employees under the Act is available from your HR Rely advisor).

For employers who operate a relevant policy, it is likely that any employee who is on long-term sick absence will be a candidate for ill health retirement, depending upon the facts. The above considerations will still fall to be considered, although this should happen as a matter of course as the relevant IHR procedure is progressed.

Other general issues

Fairness, sick pay and permanent health insurance schemes

It is a commonly held misconception that it will be unfair for an employer to dismiss an employee who remains entitled to receive remuneration under the company's sick-pay scheme, and that it will be fair to dismiss the employee once such rights under that scheme have been exhausted. In fact, the existence of such a scheme is merely one of the factors to consider in evaluating the overall fairness of the dismissal. The existence of the scheme may indicate that the employer had envisaged the possibility of its employees enduring illnesses for at least for the length of time for which the employee is entitled to sick pay under the scheme, and may be taken to have implicitly indicated that the employer is able to cater for such absences. But a tribunal is not bound to assume that any such implication can be drawn from the existence of a sick-pay scheme, particularly if its terms are generous.

Similarly an employer may be acting unfairly even if it waits until the sick-pay scheme has been exhausted before dismissing the employee (e.g. because the employee is in fact likely to return to work shortly thereafter).

It should be noted that, exceptionally, the dismissal of an employee in receipt of a benefit under a permanent health insurance scheme may constitute a breach of contract, even if the appropriate notice is given. In the case of Aspden v Webbs Poultry and Meat Group (Holdings) Ltd [1996], the employer operated a scheme whereby employees who were wholly incapacitated by sickness or injury from continuing to work would receive three quarters of their salary until death or retirement, provided that he or she remained in the company's employment. In these circumstances the judge held that even although the employee's contract expressly provided for dismissal for prolonged incapacity, there was an implied contractual term to the effect that, save where there was gross misconduct justifying summary dismissal, the employer would not terminate the contract while the employee was incapacitated for work and was receiving the insurance benefit. Advice should always be sought if dismissal is contemplated in these circumstances as substantial compensation may be awarded for breach of contract in these cases.

Ill Health Caused by Employer's Treatment

Sometimes the ill health may have been caused by the conduct of the employer. However, this does not mean that a subsequent dismissal of the employee is thereby necessarily unfair. The Court of Appeal (in McAdie v Royal Bank of Scotland [2007]) has determined that if an employee's ill health was caused by the employer's treatment, that might justify a tribunal requiring the employer to demonstrate extra concern before implementing a dismissal (it may, for example, be necessary to “go the extra mile” in finding alternative employment for such an employee, or to put up with a longer period of sickness absence than would otherwise be reasonable). Of course, an added incentive for the employer in avoiding the employee’s dismissal in such circumstances is that it could minimise the risk of a significant personal injury claim.

Capability and Disablement

Dismissals for capability which involve disabled employees must be considered in the context of the employer’s obligations under the Equality Act 2010.

Sometimes the employee may claim that he is absent for reasons of ill health but the employer may believe that he is malingering. This is obviously difficult to establish, particularly where the employee can produce a fit note signed by his doctor. Where a doctor's fit note states the cause of a worker's absence, the employer must accept that as the true reason for absence, unless there is other medical evidence which contradicts that fit note. If an employer disbelieves what is stated in a fit note then they must normally obtain further reliable medical evidence to back up their doubts, before they take any action which explicitly or implicitly expresses that disbelief.

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