What SMEs need to know about unfair and constructive dismissal

By Lorraine McClure, Parslows Jersey law firm

Employee dismissals are one of the worst parts of running a business. Your employees are valuable to you and you have spent time and resources fostering a good working relationship with each one. But, you also know that having the right team around you is the key to your business’ success. Sadly, this sometimes means that you have to make difficult decisions.

For both the employee and the employer, a dismissal can be an emotional experience. As the employer, it is your responsibility to keep the process professional and amicable. Failure to do so can lead to claims of unfair or constructive dismissal made against you. You could end up in a nasty legal battle.

The best way to guard yourself against an unfavourable employment tribunal ruling is to understand the relevant employment law.

What is an unfair dismissal?

An employee can make an unfair dismissal claim if they feel that their contract was terminated without fair reason. A claim can also be made if the appropriate procedures were not followed by the employer. The language of the law may seem vague and opaque. What constitutes fair reason? How do you qualify adherence to procedures?  Claims are often informed by the emotions of the employee, so it can be difficult to protect yourself from a claim.

There are some circumstances in which a dismissal is automatically considered as unfair. To ensure that you’re abiding by the law, make sure that you never justify a dismissal for the following reasons:

What to do if an unfair dismissal claim is made against you

If a claim is made against you, you will need to attend a tribunal. You will need to show that you had fair grounds for dismissal. This means you will have to illustrate that you gave a fair indication of the problem, attempted to resolve it and ultimately followed the correct procedures.

According to the employment tribunals guidelines, there are five justified reasons for dismissal:

  • Capability: The employee lied about health or qualifications
  • Conduct: Behavioural misdemeanours that are at odds with the company’s ethos and expectations
  • Redundancy: If the redundancy policy was already established and stuck to
  • Breaking the law: Breaches of civil or criminal law, both in and outside of work hours.
  • Any other reason: Deliberately open, this clause protects employers against employees who wanted to be fired in order to bring a case for unfair dismissal.

What is a constructive dismissal?

There is a lot of misinformation surrounding constructive dismissals. Employers and employees alike struggle to identify an unfair dismissal from a constructive dismissal. Put simply, a constructive dismissal claim can be made if an employee is forced to leave their role because of a disagreement over changes to their contract.

Here are some of the circumstances that could lead to a constructive dismissal claim:

  • Demotion or sudden pay decrease
  • Unreasonable changes in work hours or shifts
  • The compensation package is removed

What to do if a constructive dismissal claim is made against you

An employer is entitled to manage its workplace and implement changes to the employment contract from time to time. The key is to give reasonable notice of any planned changes and intentions.

Here are four tips to follow to ensure you are operating within the law:

  • Assess the potential impact of any changes to the terms of employment, both on an individual basis and for the overall business
  • Provide reasonable notice to any employees potentially affected by changes to the employment contract
  • Keep organised records of communications with employees regarding the changes to their employment
  • Document the process

Finally, always speak to a specialist employment lawyer if a claim is made against you and for any other employment or HR matters.

Lorraine McClure is a lawyer at Parslows Jersey law firm. Lorraine specialises in employment law and is involved in all areas of the firm’s work regarding contentious issues and claims in this area.