Unfair dismissal

The employer has the burden of proving that the dismissal was fair. The fair reasons are (i) reasons relating to capability or qualifications; (ii) reasons relating to conduct; (iii) redundancy; (iv) that continued employment would be a breach of statute; and (v) some other substantial reason of a kind to justify dismissal.

The Act also specifies grounds for dismissal which are automatically unfair: (i) that the employee was, or proposed to become a member of an independent trade union; (ii) that the employee had taken part in the activities of an independent trade union; (iii) pregnancy or any reason connected with pregnancy; (iv) failure to offer alternative employment to an employee returning from maternity leave whose original job no longer exists; (v) refusal to join a union where there is a union membership agreement and the employee has objected on religious grounds; and (vi) sexual or racial discrimination.

Dismissal is defined in the EPCA 1978 and includes (i) termination of a contract of employment by the employer whether summarily or by notice; (ii)refusal to renew a fixed-term contract which has expired; and (iii) 'constructive dismissal' where the employee terminates but this is justified by the conduct of the employer.

Termination with or without notice There are cases where there is ambiguity as to whether an employee has been dismissed and the essential test seems to be what the employer intended by the words used and what a reasonable employee would have understood.

Contracts can be terminated by frustration which is not dismissal. Incapacity through illness is the main source of claims. The criteria for determining when the incapacity frustrates a contract were laid down in Egg Stores (Stamford Hill) v. Leibovici [1977] and include (i) the length of the employment; (ii) the expected duration of the employment; (iii) the nature of the job.

Where an employer dies, goes into voluntary or compulsory liquidation or, in the case of a partnership is dissolved, the employee is treated as having been dismissed and is entitled to redundancy payments if the business is not continued under a new owner or his contract is not continued.

Refusal to renew a fixed term contract. A fixed term contract must have a defined beginning and end with the date known at the outset. Where no termination date is specified, it may be a contract for a particular purpose and not protected. A fixed term contract may include a term providing for termination by either party giving notice.

Constructive dismissal. Claims often arise from the employer exercising a power to vary the contract. In White v. Reflecting Roadstuds Ltd (1991), White's contract provided that 'the company reserves the rights ... to transfer employees to alternative work, and it is a condition of the contract that they are willing to do so when requested'. White's attendance suffered since he found his current employment too physically demanding and, after a warning, he was transferred and claimed this was constructive dismissal. The EAT found the transfer was in accordance with the flexibility clause which permitted transfer to work at lower rates of pay. The use of the clause did not have to be reasonable but could only be used on grounds of operational efficiency.

The EAT had taken into consideration the implied term of mutual trust and confidence. In Greenaway Harrison Ltd v. Wiles (1994), the employer wished to change the hours of telephonists, and women with children, who claimed that they would find the new shifts difficult, were told that they would be dismissed if they failed to agree to the new terms. The court held that, in the absence of real consultation, although the employer had a legal right to terminate the contract without notice, the threat amounted to constructive dismissal and was unfair.