Dismiss employees

Dismissing an employee can be complicated particularly if there have been misconduct or performance issues. Make sure you follow the correct procedure and avoid the Employment Tribunal.

Choose the correct letter for the situation. If an employee does not qualify for unfair dismissal rights a Termination of employment letter is usually satisfactory. If they do qualify for unfair dismissal rights then make sure you follow the right procedure before dismissing them. This will usually involve establishing a potentially fair reason for dismissal, for example, misconduct, lack of capability or qualifications or a redundancy situation. Consider using a Dismissal letter for misconduct when you want to dismiss an employee for misconduct or a Dismissal letter for poor performance once you've completed a fair and objective process. If at any time an employee commits an act of gross misconduct, you can consider using a Summary dismissal letter to dismiss that employee without notice. Consider using a Redundancy dismissal letter when you want to dismiss employees by reason of redundancy, and once the correct process has been followed. It may sometimes be necessary to use a Settlement agreement to avoid litigation between an employer and employee.

Make sure you read the employee's Contract of employment to avoid a breach of any terms in the agreement and any company policies and procedures (eg disciplinary policy). Check the agreed notice period for the employee to ensure you give enough notice before you dismiss them. If you want the employer to take garden leave or receive a payment in lieu of notice (PILON) check to see whether this is allowed in the employment contract. If there are no provisions relating to garden leave or PILONs in the contract of employment then you won't be able to enforce them. Doing so will be a breach of contract and can result in claims to the Employment Tribunal. If you want an employee to take garden leave or pay them in lieu of notice, you can do so if both you and the employee mutually agree to such an arrangement.

If an employee commits an act of gross misconduct (eg theft, intoxication at work or violence) they can be dismissed without a formal written warning or notice period using a Summary dismissal letter. However, a hearing should still be held to consider the behaviour of the employee and to establish the facts. A fair process should still be followed and the employee should be able to state their defence to the alleged misconduct.

The unfair dismissal rule states that employees can only be dismissed for one of five 'fair' reasons set out in law and after a fair process. A dismissal may be fair if it is by reason of:

• capability
• conduct
• redundancy
• a statutory requirement
• some other substantial reason

These are legal terms set out under statute. For further information, read Unfair dismissal.

The unfair dismissal rule does not apply to employees who have worked for less than two years. A General dismissal letter can be used for these types of employees. However, this doesn't give employers the right to dismiss employees without good reason. There are some dismissals that will automatically be unfair whatever the length of service (eg if the employee is pregnant, on maternity leave or has reported a health and safety issue) which are set out in statute. For further information on automatic unfair dismissal, read Unfair dismissal.

Employees who have worked for more than two years are protected by the rules on unfair dismissal. In this case, you must dismiss them for one of five potentially fair reasons. Unfair dismissal is a relatively complex area of law and dismissing employees who are protected will require a thorough process. Ask a lawyer for advice where you're not sure if your reason for dismissal is a fair one.

A fair process must also be followed. For less serious misconduct an employer needs to give at least two formal warnings before dismissal. The same process must be followed if the employee is performing poorly. Use the right letters depending on whether you are dismissing someone for poor performance or misconduct and ensure you've followed a fair process before sending them.

Redundancy only applies where an employer stops carrying on the business for which an employee was employed or requires fewer employees to carry out work of that particular kind. There is a process that must be followed before dismissing for redundancy which includes consultation, pooling and selection.

When an employer or employee wants to terminate the contract of employment it will be necessary to provide notice. The only times when a notice period doesn't have to be given is where the fixed-term duration of the contract expires without renewal, gross misconduct or where there is a PILON clause. It's important to give the correct notice period to prevent claims in the Employment Tribunal, most notably for wrongful dismissal. For further information, read Notice periods.

Occasionally it may be necessary to ask an employee to sign a Settlement agreement to avoid litigation. A settlement agreement waives an employee's rights to bring a claim against an employer normally in exchange for payment. An employee must receive legal advice before signing the agreement and must not be put under undue pressure. For further information, read Settlement agreements with employees.