Under the Employment Rights Act 1996, employees in the UK who have accrued at least two years of continuous service acquire the statutory right not to be unfairly dismissed. Central to any dismissal decision is the requirement that the employer must demonstrate both a fair reason for dismissal and that the decision falls within the band of reasonable responses that a reasonable employer would adopt in all the circumstances. Two of the five potentially fair reasons are capability and misconduct.
Capability Dismissals
Definition & Legal Threshold
Capability relates to an employee’s ability to perform the job to the required standard, whether due to competence or health‑related issues. To rely on capability as a fair reason, employers must establish:
Clear Standards: The role‘s essential duties and performance criteria must be communicated in writing (e.g., job descriptions, appraisal targets) (ACAS 2023).
Support and Reasonable Adjustments: For competence issues, this may include additional training, coaching, or mentoring. For health‑related incapacity, employers must consider reasonable adjustments under the Equality Act 2010 (CIPD 2023).
Investigation and Review: A structured performance‑management process should record performance reviews, set improvement targets, and provide sufficient time for improvement (ACAS 2023).
Opportunity to Improve: If an employee fails to meet agreed targets despite support, the employer can convene a final hearing to consider dismissal. Even then, dismissal should only be contemplated if no reasonable alternative exists (Adejugbe 2021).
Failure to comply with these procedural steps such as skipping interim reviews or imposing unrealistic targets can render a capability dismissal unfair.
Misconduct Dismissals
Definition & Categorisation
Misconduct covers breaches of workplace rules or disciplinary standards. It is typically divided into:
Ordinary Misconduct: Minor infractions (e.g., lateness, unprofessional behaviour) warranting warnings and corrective measures.
Gross Misconduct: Serious offences (e.g., theft, physical assault, fraud) justifying summary dismissal without notice, subject to a thorough investigation (Adejugbe 2021).
Procedural Fairness
To ensure a misconduct dismissal is fair, employers must:
- Investigate Promptly: Gather evidence, interview witnesses, and allow the employee to respond to allegations.
- Right to Be Accompanied: Employees must be informed of the right to bring a companion (colleague or trade‑union representative) to disciplinary hearings (ACAS 2023).
- Proportional Sanctions: Sanctions should align with the severity of the misconduct; disciplinary panels must weigh mitigating factors (e.g., length of service, disciplinary record).
- Appeals Process: Employees should have the opportunity to appeal against any dismissal decision (Adejugbe 2021).
Neglecting these steps can expose the organisation to unfair dismissal claims, potentially leading to compensation awards and reputational damage.
