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Dismissing staff: dismissal procedure for small businesses

3 min read | 24 October, 2017 By Melissa Jones


No one likes being the bad guy when it comes to giving someone the boot. Hiring staff is fun – you’re growing the business, bringing in fresh talent and doing something positive. Sacking someone is not – it’s negative, it smacks of failure and it can be a headache for a business owner. If you run a business however, it is something you will likely have to deal with at some point.

As much as you want great people in your business, sometimes you have someone who just doesn’t fit. The question is how do you let them go and stay on the right side of the law? 

Your dismissal procedure is the answer. Having a proper policy in place can save you a lot of problems (and a potential trip to the employment tribunal) down the line.

What is a dismissal procedure?

Contrary to popular belief, it’s not almost impossible to legally sack an employee. The dismissal procedure or policy will lay out the process which needs to be followed to allow someone to be dismissed from your company. 

The procedure doesn’t have to be complicated either but there are certain rules you do need to follow for any dismissal to be fair. 

Firstly, there are five potentially fair statutory reasons you can rely on to dismiss a worker: 

  • Conduct or behaviour
  • Capability (or inability to perform competently)
  • Redundancy
  • Breach of statutory restriction such as employing someone illegally
  • Other substantial reason e.g. company restructure 

If you don’t have one of these reasons then the dismissal will be unfair even if you followed your dismissal procedure.

Once you have a reason, you need to investigate it fully and ensure it is reasonable. This is where following your dismissal procedure will be really important. 

What you need to do 

Establish the facts 

If you have cause for concern around an employee’s behaviour or performance, then you need to investigate it and find out what is really true. This might involve holding an investigatory meeting with the employee or collating data. HR software can help you keep track of employee performance and disciplinary issues. 

Inform the employee of the problem

You must inform the employee of your concerns without unreasonable delay. If it is a disciplinary or performance matter, then you should do so in writing. Your letter should lay out the grounds for concern and evidence for the employee. You should provide copies of any written evidence or statements with your notification. You should also give notice of where and when a meeting will be held and this should be done in a reasonable time frame.

Hold a meeting with the employee to discuss the problem

This is the first stage to really discuss the issue with your employee. You should explain the case against the employee and go through the evidence you have collected. Your employee should have a reasonable opportunity to answer the allegations against them, present their case, ask questions and call witnesses (Notice of any witness attending for either side should be given in advance). 

Allow the employee to be accompanied in the meeting

Your employee has a statutory right to be accompanied where a disciplinary meeting could lead to a formal warning or disciplinary action. This is usually a fellow worker, a trade union representative or someone employed by a trade union. Your employee must make a reasonable request. What is reasonable will depend on the circumstances of each individual case.

Decide on appropriate action

After the meeting you must decide on a course of action if performance issues or acts of misconduct have been proven. It is usual to give a formal written warning with a final warning being given if a further act of misconduct or failure to improve performance takes place within a given time frame.

Dismissal must only be done by a manager with the authority to do so. The employee must be informed in writing giving the reasons why, when employment will be terminated and laying out the appeals process

If misconduct is sufficiently serious e.g. gross misconduct such as fraud or theft, dismissal can be instant but fair procedure must still be followed.

Provide employee with opportunity to appeal 

Your employee has the right to appeal if they believe the action to be unfair or unjust. This should be impartial and held without reasonable delay.

If you follow procedure and ensure your process is fair and unreasonable at all times, you should avoid falling foul of employment law and more importantly, avoid a dreaded unfair dismissal case.

Calculating final pay

Whatever the reason for dismissal, you're legally responsible for calculating and providing the employee's correct final pay.

In most cases, you can do this by breaking down their pay into weeks and then days before working out how many days they have worked in that pay period. You can read our guide on calculating final pay here

However, if you have made the decision to make the employee redundant, you will need to calculate their redundancy pay packet according to how long they have served the company for, making sure it correlates with their employment contract too. 


Posted on 24 October, 2017

By Melissa Jones

in Business Process

Tag Business Process

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