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ACCA F4 paper: Dismissal – rules and remedies

Nicola Floater explains what you need to know about employment law to get a pass in F4

February 2016

Employment law is an important area of the syllabus for F4 (English). There are a number of types of dismissal that you need to understand, which are:
• Wrongful dismissal.
• Unfair dismissal.
• Redundancy.

Wrongful dismissal
Wrongful dismissal occurs when the employer ends the employment contract in a way that is in breach of the employment contract. The usual situation in which this would occur is when the employee is dismissed without being given the notice they are contractually entitled to.
Notice of dismissal is normally an express term of an employment contract agreed between employer and employee. However, the Employment Rights Act states minimum notice periods based on length of service, and the employee must always be given at least this amount of time, though the employment contract can extend these further.
If the employee is dismissed without sufficient notice this is referred to as ‘summary dismissal’. Summary dismissal is always seen as being ‘wrongful’ unless the employee has been dismissed for gross breach of conduct; or has accepted less notice, for example, when receiving a payment in lieu of notice.

Example
Javier is entitled to three months’ notice under his employment contract. His employer dismisses him, giving him no notice of termination for repeatedly coming into work late despite numerous warnings. Although Javier has been summarily dismissed he has not been wrongfully dismissed as the termination of his contract was due to a fundamental breach of contract on his behalf.
If the employee has been wrongfully dismissed they can make a claim to the County Court or High Court (depending on the size of the claim). This must be done within six years of dismissal. If the court finds in their favour the usual remedy is damages.

Unfair dismissal
Under the Employment Rights Act, the employee has a right not to be unfairly dismissed. This occurs when they are either dismissed for something that is not a fair reason, or following something that is not a fair procedure. If the employee believes they have been unfairly dismissed they should make a claim to an employment tribunal within three months. When making a claim for unfair dismissal the employee must prove two things:
• That they have two years’ continuous service (unless they were dismissed for an inadmissible reason such as becoming pregnant).
• That they were dismissed.
The second requirement means the employee cannot usually make a claim if they ended the employment contract. The exception to this is in cases of constructive dismissal. This is when the employee ends the employment contract but they do so because of the employer’s actions.
If the employee proves they were dismissed it is then up to the employer to prove that the dismissal was for a fair reason (Devis W & Sons Ltd v Atkins (1977)). There are five statutorily fair reasons for dismissal. These are:
• Capability or qualifications.
• Conduct.
• Redundancy.
• Contravention of a statute.
• Some other fair reason.
If the employer cannot prove that the employee was dismissed for one of these five statutorily fair reasons then the tribunal will award a remedy for unfair dismissal. The employer must also prove that they used a fair procedure for dismissal. This includes having a set disciplinary procedure involving the use of warnings and a proper inquiry and hearing.
The remedies available for unfair dismissal are reinstatement (an order for the employee to be given their old job back), re-engagement (an order for the employee to be given a new job with comparable terms) or compensation (a financial payment). The most usual remedy is compensation unless the employee wishes to return to their job.
Compensation can comprise up to three different elements. The basic award is based on the employee’s age, weekly pay and years of service. The tribunal can add onto this the compensatory award to reimburse the employee for losses suffered and expenses incurred. Finally, an additional award may be added on in cases where either the employee was dismissed on grounds of discrimination, where the employee was dismissed for an inadmissible reason, or where the employer was ordered to reinstate or re-engage the employee and they refused.

Redundancy
Redundancy occurs when there is no longer work available for the employee. This could be because the employee has ceased the type of business the employee was engaged for, or because the business has ceased in the location where the employee was originally taken on.
Redundancy is a statutorily fair reason for dismissal but the employer must follow a fair basis for selection of employees. If the employer does not follow a fair selection process this becomes an inadmissible reason for dismissal and the employee does not need two years’ service to claim unfair dismissal. The employee would also be entitled to an additional compensation payment in the situation.
If an employee is made redundant they are legally entitled to at least a minimum redundancy payment which is calculated in the same way as the basic award for unfair dismissal. If they do not receive this they can make a claim to an employment tribunal within six months of being dismissed. To make a claim the employee must prove they have two years’ service and that they were dismissed. If they can prove this the tribunal will presume they were made redundant, and order the payment.

Conclusion
Dismissal in any of its forms could be the subject of a section A or a section B question in the F4 English exam. PQs should be able to understand the rules and remedies for wrongful dismissal, unfair dismissal and redundancy and be able to apply them in a scenario.

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