The Difference Between Fair and Unfair Dismissal

Working in HR is infinitely rewarding. Alongside everyday interactions, HR teams get to build long-lasting, meaningful relationships with colleagues. HR leaders are there to see and support employees through the moments that matter in their lives. From taking on a new hire and watching them develop personally and professionally to waving them off on parental leave and then meeting their new arrival when they pop by for a visit.

HR professionals are also at the forefront when it comes to employees transitioning out of their roles. This includes celebratory moments like presenting a gold watch at a retirement party, wishing them all the best when they’re promoted, or providing a reference for someone embarking on a new journey.

However, HR’s role extends to the more challenging aspects as well. No one who works in HR can say they enjoy it when their company initiates layoffs, redundancies, terminations, or sackings. While dismissing someone is never easy, it is an important part of the machinery of business and, like every other aspect of HR work, must be handled with the utmost sensitivity, professionalism, and strict adherence to legal frameworks.

Understandably, you may need to learn how and where to start with dismissals. They can be a quagmire that your company could easily fall into. As there are potentially severe financial and reputational damages at stake, HR must ensure dismissals are done fairly and in line with these laws so they don’t end up as court cases and sanctions.

In this article, we look at what you need to know about fair and unfair dismissal. But first, let’s clarify what we mean when we use the term dismissal.

The Definition of Dismissal

In Ireland, the Workplace Relations Commission (WRC)—the responsible statutory body—states that dismissal is when an employer decides to end a contract of employment. Redundancy, termination, layoffs, sacking—whatever the terminology used, dismissal is the action taken by an employer that affects a single or group of employees.

A dismissal isn’t necessarily related to an employee’s behaviour or ability. It can be used when an organisation needs to make changes, like cutting staff numbers due to financial hardships. The same can be said for making a position redundant because customer needs have changed, new innovative solutions have become available, or production mechanisms have evolved.

No matter the reason, dismissal shouldn’t be confused with other instances where employees leave employment, namely:

Resignation – this is when an employee decides to leave the organisation.

Retirement – is when an employee reaches the age where they automatically, or choose to, stop working.

Involuntary job loss and unemployment take a massive toll on employees and their families. From financial distress, relationship breakdowns and a lessening of life chances to impacts on physical health and mental wellbeing the impact of losing a job hits hard. Because of this, the state protects people from being dismissed without sound reason. The judgement as to whether the decision to issue a dismissal is just or unjust is weighted in favour of employees, so it’s talked about in terms of being ‘fair’ or ‘unfair’.

In our upcoming webinar, we are delighted to host Fredericka Sheppard, Managing Director and Co-Founder at Voltedge, to explore the key aspects of dismissal management, offering insights and best practices to help HR professionals traverse this challenging terrain with confidence and integrity. Register today for free!

What Counts as Unfair Dismissal

According to the Irish Citizens Information Board (CIB), there are certain circumstances under which dismissals are automatically considered unfair. That is if they are based on an employee’s:

• Membership, or proposed membership, of a trade union or participation in trade union activities;
• Religious or political opinions;
• Being a party or witness to legal proceedings against an employer;
• Race, colour, sexual orientation, age, membership of the Traveller community;
• Any matters connected to pregnancy or birth, including breastfeeding, medical appointments, and antenatal classes;
• Availing of leave under rights provided by law such as maternity, adoptive parents, paternity, carer’s, parental, or force majeure;
• Unfair selection for redundancy, or making a protected disclosure, that is to say, raising concerns about wrongdoing at work.

It’s also considered unfair dismissal when an employer ends a contract of employment without providing a good reason, known as grounds for dismissal, or without following fair procedures and taking appropriate actions laid out by law.

Constructive dismissal is another form of unfair dismissal. It differs because instead of the employer initiating the parting of ways, it is the employee who leaves their job as a result of the employer making working conditions so difficult it is unreasonable for them to stay.

The reasons an employee gives must be serious enough to justify their decision to leave. The employee must also have proof that an employer behaved in a way that made resigning their only choice. For example, the employer is:

• In serious breach of contract, such as not paying or demoting them for no reason;
• Forcing unreasonable changes onto their conditions of employment without agreement, for instance, changing shift patterns without talking to them about it in advance;
• Taking away contractual benefits like health insurance or a company car that they rely on;
• Subjecting them to unfair criticism or singling them out for discipline;
• Allowing them to be bullied or harassed by colleagues or customers without interjecting;
• Creating or failing to prevent dangerous working conditions;
• Making false allegations of fraud or misconduct.

The CIB and WRC advise employees to raise the issue and try to resolve it before taking action when considering resigning under constructive dismissal. As HR professionals, it’s vital that employees are supported through this process as covered by the regulations and using workplace complaints or grievance procedures.

What Counts as Fair Dismissal

Put simply, a fair dismissal is one that cannot be judged to have been unfair. The Law Society of Ireland says that a dismissal must satisfy three conditions to be considered genuinely justified.

The Three Conditions of Fair Dismissal

The onus is always on the employer to prove a dismissal following natural justice and fairness rules. To be considered fair, the dismissal process must be:

• Initiated on fair grounds, laid out above, for dismissal under Irish law;
• Carried out according to fair procedures and with just actions;
• Not contrary to any of the reasons deemed automatically unfair.

Fair Grounds for Dismissal

As per the first critical condition, dismissals must be backed up by legitimate reasoning to be considered fair. Known as ‘grounds’, these reasons are clearly laid out by law. In short, the dismissal is deemed not to be unfair if it results from one or more of the following:

Capability

It can be grounds for dismissal if an employee can’t do their job because they are repeatedly late or absent. Capability covers both medical and non-medical lateness or absences. So, everything from repeatedly missing the bus and frequent short-term sick leave to long-term medical conditions.

Competence

If an employee is not meeting expected standards, it can be grounds for dismissal. Competence covers instances when employees fall short of what they were hired to do, for example, turning in poor quality work, missing targets, or not hitting KPIs. Interestingly, a recent report from Mason Hayes & Curran revealed that 44% of employers find dismissal on the grounds of competence to be the most difficult.

Qualifications

If an employer finds out that an employee has misled them about their qualifications, it is grounds for dismissal. If gaining additional qualifications like industry training or certification is a condition of employment, and the employee fails to achieve this despite being given an opportunity to do so, they can also be dismissed.

Redundancy

Redundancy covers situations where the employee is no longer needed by the business. If, for instance, the organisation is changing or in times of economic downturns, it might be necessary to scale back workforces. Similarly, if the business is closing or being merged with another an employee’s role might not be needed.

Contravening the Law

This means that employing the person would be contrary to regulations or legislations. If an employee is prevented from continuing to work under certain restrictions, for example, if their work permit expires, there are fair grounds for dismissal.

Some other substantial grounds (SOSG)—This umbrella term covers issues that don’t fall under any other grounds. SOSG typically refers to conduct. Behaviour can range from a series of minor incidents to a case of gross misconduct. Some examples are an employee engaging in bullying, creating conflicts of interest, or personality clashes. However, SOSG also includes instances when dismissals follow pressure from customers or investors, reputational damage, a breakdown in trust or confidence, and the expiry of fixed-term contracts.

Advice for HR When Dealing with Dismissals

Employment laws and codes of practice are complex areas to deal with. Especially if it’s the first time you or your company is considering dismissing an employee. Ensuring a dismissal is fair is like walking across a balance beam. One tiny sway either way and it’s a potential case of unfair dismissal and all that it carries with it.

As an HR professional you’re caught between ensuring the employee’s rights and upholding the company’s interests. To avoid undue harm to the employee and the potential claims and subsequent sanctions and reputational damage that come with unfair dismissals you must follow correct procedures and have reasonable grounds. If in doubt, it’s always best to consult an expert for legal advice.

The HRLocker HR Dismissal Checklist provides a structured, step-by-step process for HR Managers to follow when dismissing employees. It ensures compliance with legal requirements, company policies, and fair procedures, thereby mitigating risks of unfair dismissal claims. Download now for free.

Dismissals are never easy. But, having the right information, policies and practices will help you through the processes, make certain it’s fair for the employee, and protect your organisation from the consequences of and unfair dismissal.