Most employers do not intend to unfairly dismiss, it can happen unintentionally – and it can be a costly mistake to make. Recent statistics indicate that the average pay out for unfair dismissal claims in 2022/23 in the UK was £12,000, with the maximum award in the same year being £184,000.

The number of successful claims is increasing. In the latest 2 years those receiving compensation in an unfair dismissal claim has risen from 630 claims in 2021/22 to 790 in 2022/23.

What is Unfair Dismissal?

Unfair dismissal refers to the termination of an employee’s contract of employment in a manner that is considered unfair.

Common Pitfalls for Employers

1. Lack of Documentation: One of the primary pitfalls for employers is failing to maintain adequate records of employee performance, misconduct, or disciplinary actions. Without proper documentation, it becomes challenging to demonstrate that a dismissal was justified.
2. Inadequate Due Process: Employers must follow a fair and transparent procedure when dismissing an employee. This includes giving the employee an opportunity to respond to allegations, providing warnings when appropriate, and allowing them to have a representative present during disciplinary meetings.
3. Failure to Comply with Employment Contracts: Employers should adhere to the terms and conditions outlined in employment contracts. Deviating from these agreements without proper justification can cause problems.

Impact on the Business

1. Legal Consequences: Falling foul of unfair dismissal laws can result in costly tribunal proceedings. Employers may be required to pay compensation to the employee. Where employers have failed to follow a fair process, an uplift of 25% could also be awarded.
2. Damage to Reputation: News of an unfair dismissal case can damage a company’s reputation. In the age of social media and online reviews, negative publicity can travel fast, and have a lasting impact on customer trust and brand image. Tribunals do form part of public record, so it is accessible to investors, potential job applicants and customers.
3. Decreased Morale: Unfair dismissals can erode employee morale and trust in the company. When employees perceive that their jobs are not secure or that the company does not value their rights, productivity and retention can suffer.
4. Increased Staff Turnover: High-profile unfair dismissal cases can lead to higher employee turnover as other staff members may lose faith in the company’s ability to provide fair treatment.

Employers should prioritise proper documentation, fair processes, and adhere to employment contracts. Ultimately, fostering a workplace culture that values fairness and equity not only benefits employees but also contributes to the long-term success and sustainability of the business.

If you need any support or guidance on ensuring a dismissal is fair to mitigate the risks above, please get in touch.