Constructive Dismissal: What Every Leader Needs To Know
How to Exit an Employee Without Risking a Constructive Dismissal Claim
When an employee isn’t working out, you might feel it is best for your business to let them go. But how you handle this process matters. Get it wrong, and you could face a constructive dismissal claim. That means an employee could take legal action against you, saying they were forced to resign due to unfair treatment. This could cost your business a lot of money and hassle.
Here’s a clear, step-by-step guide to help you manage the situation safely and fairly:
1. Know What Constructive Dismissal Is
Constructive dismissal happens when an employee feels forced to resign because of actions by their employer, such as:
Reducing pay or benefits without consent
Changing job roles significantly without agreement
Unfair changes to working hours or location
Allowing discrimination or bullying to go unchecked
Ignoring employee grievances
Creating a hostile work environment
Understanding this can help you avoid making these mistakes.
2. Follow a Fair Process
You can’t just push someone out. You need a valid reason and a fair process:
Set Clear Expectations: be clear about job roles and performance standards. Employees must know what is expected of them.
Provide Support and Training: if an employee isn’t meeting expectations, offer extra help or training to improve their performance.
Use Formal Procedures: if improvement isn’t seen, start a formal performance management or disciplinary process. Follow your company’s established procedures carefully.
Keep Detailed Records: document all meetings, support offered, and performance reviews. These records help protect your business if there's a dispute.
If the employee still doesn’t improve despite these steps, you have grounds for a fair dismissal based on capability or performance.
3. Explore Other Options
Sometimes, formal procedures might not be the best route. Consider these alternatives:
Mutual Agreement: an open conversation can sometimes lead to an agreement that the employee leaves willingly.
Settlement Agreement: you might offer financial compensation in return for the employee agreeing to leave on mutually agreed terms. This agreement legally protects your business.
Redeployment: sometimes the employee might perform better in a different role or team within your business.
Always Seek Expert HR Advice
Before you make any decisions, always get advice from an HR or legal expert. Proper support helps ensure that you exit an employee fairly, legally, and without negative repercussions.
Taking these steps carefully can save your business significant time, stress, and expense. If you need practical support, we're here to help. Reach out today for a confidential conversation.
