Overview

For a dismissal to be fair, it's for you to show that the only or principal reason for it relates to the following:

• The employee's capability or qualifications to do the work of the kind for which they were employed
• The employee's conduct
• A redundancy
• The fact that the employee could not continue to work in the position held without contravening some statutory provision
• Some other substantial reason justifying the employee's dismissal from the position they were holding

If you can't show this, the employee could make a claim for unfair dismissal at an Employment Tribunal.

Capability and qualifications

Incapability or lack of qualification for which your employee is dismissed, must relate to the work that they were doing. In other words, the employee was incapable of doing the job by virtue of incompetence, or an inherent inability to perform the job. It also extends to an inability to do the job by reason of illness or injury. Therefore sickness may be reason to justify a dismissal.

Conduct

This reason is fairly general and can cover virtually any form of misconduct, but would usually be misconduct within the employment. It would include, for example, disobedience of orders, breach of a duty of fidelity, dishonesty, fighting, sexual harassment, absence without permission, lateness and other breaches of contract or breaches of work rules.

To minimise potential liability for unfair dismissal, you should have a comprehensive set of disciplinary rules.

In addition to conduct within the workplace, dismissal for conduct outside employment, such as criminal offences committed elsewhere, will also provide a valid reason for dismissal. For such a dismissal to be fair, the outside misconduct must usually have an effect on the employment relationship.

For example, if your employee is a cashier and charged with a motoring offence, this should not have any effect on your working relationship. However, if the employee is charged with theft it could have a substantial effect on the employment relationship.

In order for you to rely on misconduct to justify a dismissal, the misconduct must have been known to you at the time of the dismissal. You cannot rely on subsequently discovered misconduct to justify the dismissal. In other words, if your employee is dismissed for a reason that is unfair, and subsequently you find out that they've committed some serious offence, you cannot rely on the later conduct when giving reasons for the dismissal.

However, if you are notified of some serious offence prior to the dismissal, but after giving notice of termination of employment, you are entitled to use that conduct in justifying the dismissal.

Redundancy

Redundancy is a potentially fair reason for dismissing your employee. See the section on redundancy for more information.

Retirement

For many workers the removal of the default retirement age means that they are entitled to work for as long as they want, without being forced to retire once they reach a specific age.

However, it is still possible for employers to lawfully require an employee to retire at a specified age, as long as the chosen age can be 'objectively justified'. Otherwise, you will almost certainly be liable for direct age discrimination under the Equality Act.

The law regarding the legal use of a compulsory retirement age is complex. Businesses are required to prove that its use is justified as being a 'proportionate means of achieving a legitimate aim'.

This legal test can generally be broken down as follows:

1. What 'aims' are currently recognised by the law?

2. Are the business's chosen aims actually relevant to it?

3. Is the business pursuing the aims?

4. Is the compulsory retirement age appropriate and necessary considering the nature of the business?

5. Is there any other suitable option available to the business?

What 'aims' are currently recognised by the law?

Relevant decisions have been made by the courts. They specify that pursuing 'social or public interest objectives' will be legitimate aims when imposing a compulsory retirement age on an employee. Examples of these aims include:

• facilitating access to employment for young people;
• enabling older people to remain in employment;
• sharing limited opportunities in a particular profession between generations;
• ensuring a mix of generations to promote the exchange of experience and new ideas;
• cushioning the blow for long-serving workers who may find it hard to find new employment; and,
• preserving the dignity of older employees by avoiding the need to dismiss them on the grounds of incapacity or underperformance.

The following could also be social or public interest objectives that would constitute legitimate aims:

• rewarding experience; and
• health and safety concerns for members of the workforce or the general public.

However, there currently isn't any case law in the UK that specifically deals with this.

The courts will require a business to consider whether there are any other non-discriminatory options available for it to achieve its social or public interest aims. These might include the use of appraisals to identify underperformance and/or using existing policies for managing employee capability.

The Government has stated that people will need to work for longer before they can retire and is implementing new laws to increase the state pension age. With this in mind, if you do decide that it is justified to have a compulsory retirement age, it is not recommended to force retirement before the state pension age as it may be regarded as unfair and contrary to public policy. Note also that selecting a single retirement age may not be right for all employees in your business (particularly if the roles within your business differ).

If an employee challenges the lawfulness of an employer requiring them to retire at a specified age, then the employer will need to provide evidence that it was objectively justified. This may prove hard to do as the age may have been fixed many years before the employer has tried to enforce the requirement to retire. If they are not successful, employers may also become liable to pay damages for unfair dismissal and/or unlawful age discrimination.

Acas advises employers to write down their reasons for requiring an employee to retire at a particular age, consider whether they have good evidence to support their reasons and then consider if the same result could be achieved using an alternative or non-discriminatory way. It also advises that employers should encourage employees to have more open discussions about their future plans.

Acas also recommends that before enforcing a fixed retirement age, an employer should give the employee adequate notice of their impending retirement and consider whether they will be permitted to apply to stay beyond the compulsory retirement age.

Employers must use a fair procedure when dismissing any employee, including when dismissing employees once they have reached a compulsory retirement age.

For businesses in England, Wales and Scotland, see the Acas guide on working without the default retirement age for more information. For businesses in Northern Ireland, see the NIBusinessinfo.co.uk website for more information.

If you are unsure whether or not you can justify requiring the employee to retire at a particular age, then you should seek legal advice.

Acting illegally

This covers a situation where it becomes illegal either for your employee to work in the position held, or for you to employ him or her in that position. One of the more common types of dismissal for this reason is where your employee is a driver of a motor vehicle. The court disqualifies the employee from driving because of a motoring offence. The employee is therefore not in a position to drive a motor vehicle.

Some other substantial reason

This is a separate category, but the onus of proof is on you to show that it is for some other reason that you justifiably dismissed your employee. For example, your employee marries a competitor. In these circumstances, depending upon where your employee works, their normal participation in corporate decisions and the nature of your business, there may be a real risk of a leak of trade secrets.

Statement of reasons for dismissal

If your employee has been continuously employed for at least 2 years (or one year, for employees in Northern Ireland), they are entitled to request a written statement from you of the reasons for the dismissal, which must be given within 14 days of the request. The statement will be admissible in evidence in any proceedings.

In the case of a woman, if she is dismissed while pregnant or during a maternity period, she is entitled, without prior request, to a written statement. Should you fail to comply with the request, the employee may present a complaint to the employment tribunal.

The time limit to present the complaint is generally three months from (and including) the date of termination. If the complaint is well founded, a tribunal must order you to pay two weeks' pay. There is no upper limit on the amount earned per week.