You’re fired! Why real-life dismissals are nothing like those on The Apprentice

In the long-running TV reality show The Apprentice, dismissing people looks quite straightforward.

Lord Sugar simply points a finger at the hapless candidate, utters “You’re Fired,” and that’s it, job done. Exit candidate, with wheelie suitcase, to a waiting black cab.

It’s nothing like that outside The Apprentice boardroom, of course. If your business took the same approach to letting go of an employee, then you’d soon be facing a potentially unfair dismissal claim.

To stay on the right side of the law,  it is vital that you seek sound HR advice at every stage of the dismissal process.

How the employment ends determines whether an employee can bring a claim, and the type of claim they can bring.  To avoid statutory liability for unfair dismissal, you must have a fair reason for dismissal and follow a fair procedure. 

It is important to identify the effective date of termination for various reasons, including assessing continuous employment and complying with time limits for tribunal claims.

In general, firing an employee cannot unilaterally be withdrawn, and for this reason, extreme caution must be taken when firing an employee in the heat of the moment.  Once an employer has communicated to the employee that their employment has been terminated, it cannot be taken back, and cannot be withdrawn.  If the notice of termination has been communicated, it is still open to the employer to terminate immediately during the notice period if the employee is in fundamental breach. 

Notice can be given on any day, and where it’s communicated orally, notice starts to run into the next day if given on a day where work has been performed. Similarly, where notice is given in writing, it will run from the first day after being given and received.  What is key here is that the employee has received the notice.

Summary dismissal, given orally, takes effect from the moment of communication, not at the end of the day or shift.  If it’s communicated in writing, the effective termination date is the day on which the employee reads it.

Firing an employee with or without notice is a crucial factor when assessing legal compliance. Getting it wrong can cost you dearly.

Minimum notice periods apply to every contract terminable on notice, whether there is an express or implied contractual term.  And, the dismissal may still be unfair, even if you give the requisite notice.

An employee is entitled to the longer of the contractual notice and the statutory minimum notice. If you don’t know what that notice period is, you can easily get it wrong making the dismissal unfair.

To be valid, notice must include the actual date of termination, and you must ensure it clearly states that your employee is being fired.   Warning an employee that their employment will end on or after a certain date will not constitute a valid notice of dismissal.

The date of termination can be brought forward or postponed by mutual agreement.

An employer can reserve the right to terminate employment immediately and make what is known as a payment in lieu of notice (PILON).  This is useful when the employer wants the employee to leave work immediately rather than work out their notice period.  

The right to make a PILON payment must be expressly stated in a contract of employment.  To ensure that making a PILON payment is valid, your letter of dismissal must clearly state that the employment is being terminated immediately, and crucially, that a PILON is being relied on.  If this is not done, even if the contract has a PILON clause, the employee is entitled to view the dismissal as a repudiatory breach and can affirm their contract until their notice period would ordinarily expire. 

Where there is a PILON clause in a contract and the employee commits an act of gross misconduct, or whether other conduct issues arise that allow you to summarily dismiss without notice, certain complications can arise. An example of this would be where an employer purports to summarily dismiss an employee but then also makes a PILON payment.  Note too that where a repudiatory conduct is discovered after notice is given and a PILON payment is promised, you cannot rely on the repudiatory conduct to avoid making the PILON payment. To avoid this situation, a carefully drafted PILON clause should either include an allowance for the PILON money to be repaid if gross misconduct is discovered at a later date or make it a condition of payment that the employee has not committed a repudiatory breach.

A PILON clause cannot be implied – it must be express. If there is no express PILON clause, you cannot terminate employment immediately. You will still be in breach of contract and have to pay damages for wrongful dismissal.

You can dismiss an employee without notice (known as summary dismissal) if the employee is in fundamental breach of  contract. The contract can specify circumstances where you’re entitled to do this, such as for gross misconduct.  To justify summarily dismissing an employee, there needs to be a serious element of wrongdoing – usually a deliberate act of wrongdoing. 

If you are not entitled to dismiss summarily, you will be in breach of contract if you fail to give your employee  the required period of notice,  which could open the door to a wrongful dismissal claim.

As you can see, dismissing people can be a minefield in the real world.

To avoid costly damages claims, and for peace of mind, talk to HR:4UK today. Contact us on 01455 444222