It might be cheaper to fire high value employees without reasons than to say why.
The Court of Appeal have ruled in Edwards v Chesterfield NHS Trust that an employee can claim damages for failure to follow a contractual disciplinary procedure, including compensation for loss of the chance of staying in employment.
The highest possible award in an unfair dismissal claim is £77,600. This is less than a year's salary for high earning employees and may not fully cover their losses. However, there is no upper limit for a breach of contract claim in the normal courts.
To succeed with such a claim the following circumstances must apply: "
- The employer needs to be contractually bound to follow a particular disciplinary procedure. (Following Johnson v Unisys the courts will not imply such a procedure). "
- The grounds for the dismissal need to activate the disciplinary procedure e.g. dismissal for misconduct. If you fire without reasons it might not! (Although you may incur a penalty for failure to provide reasons of up to £760). "
- The employee needs to prove that there was a chance that if the procedure had been followed they would have stayed in employment. (Without this the employee's entitlement is only to wages for the presumed duration of the disciplinary case which did not actually happen).
A less dramatic response than firing without reasons would be for employers to review existing contracts to ensure that there is no contractual right to a disciplinary procedure and that any such procedure does not fetter the employer's right to dismiss on notice.
The decision in Edwards v Chesterfield is being billed in some quarters as of enormous legal significance but this ignores a crucial factor - Mr Edwards was entitled to have his conduct considered by what amounted to an external panel. There was therefore a realistic possibility that the panel would have reached a different view from his employer and not dismissed him. For most employees, senior and otherwise, the external influence will be missing. When your employer says "You're fired" an internal disciplinary procedure is unlikely to result in a change of heart.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
