Unfair dismissal law for businesses

It's a scenario that no business owner wants to face. A member of staff has been dismissed for legitimate reasons but within days a letter arrives from a solicitor saying that he (or she) is bringing a case of 'wrongful dismissal'.  This is a difficult and daunting situation.  This guide will help you recognise:

  • How does it happen?
  • What's at stake
  • What to do
  • Preventative action

How does it happen?

Under the law there is a long list of circumstances under which dismissal is automatically unfair.  Failure to follow procedure is the most common.  There are also complications around firing pregnant women, trade union activists or whistleblowers, amongst other situations.

  • Failure to follow procedure is the most common cause
  • Look out for pregnant women, activists and whistelblowers in particular

What's at stake

When a wrongful dismissal action goes against the employer, the court has the right to levy a fine of up to £8,000 plus an additional charge of up to £55,000 based on loss of earnings. In addition, you have to consider the impact of the case on the company's reputation and morale among staff.

  • Heavy fines
  • Damaged reputation and staff morale

What to do

If a former employee does take action, you have a simple choice - either fight or admit fault and attempt to settle out of court. Settling can save a lot of disruption. If you decide to fight you should ensure that you have all the documentation relating to the dismissal - records of poor timekeeping, customer complaints etc. With good records, you are in a much better position to defend yourself. It's highly advisable to seek professional legal advice either way.

  • Fight or settle
  • If you fight, make sure you have sufficient documentation
  • Seek professional legal advice

Preventative action

There are measures that can help avoid this situation. Unless your rules are clear, the dismissed employee may well feel a real sense of grievance, and if you don't follow procedure you give that individual an open goal when it comes to building a case. So your first step should be to draw up clear HR policies, including a comprehensive guide to what constitutes misconduct and a clear guide to disciplinary procedures within the company. Apply the rules fairly at all times.

  • Draw up all the procedures and rules
  • Stick to the rules at all times

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