Is Summary Dismissal Legal in England and Wales?

As an employer, you will sometimes need to unexpectedly end your employee’s contract. This is known as dismissal. However, when you dismiss your employees, you must do so fairly and correctly. Usually, you will be required to give them a statutory notice period as detailed in their employment contract. However, you may find yourself in a situation where your employee has committed serious wrongdoing. This may leave you needing to dismiss your employee immediately and without any notice. For example, they may have stolen from you or caused damage to the reputation of your business. You may, therefore, decide to carry out a summary dismissal of your employee.

This article will explain what a summary dismissal is, when you can carry it out, and the rules surrounding this. When you do not carry out a summary dismissal correctly, it could result in a claim for wrongful dismissal.

What is Summary Dismissal?

Summary dismissal is when you dismiss your employee immediately and without notice or with payment in lieu of notice (PILON). Payment in lieu of notice simply means that you pay your employee their salary while not working for the period which you would have usually given them notice.

It is legal to carry out summary dismissal where it is in response to gross misconduct, which amounts to a repudiatory breach of your employee’s contract. 

What is a Repudiatory Breach Amounting to Gross Misconduct?

Only a court or tribunal can make a firm decision on whether your employee’s behaviour is a repudiatory breach of their contract resulting in gross misconduct. A court or tribunal will typically look at whether the conduct shows:

• a lack of care for the essential terms of the employment contract; and
• that the employee has purposively done this.

Typical examples of what the court might consider gross misconduct are:

• stealing;
• vandalism to company property;
• damaging the reputation of your business;
• a serious breach of health and safety;
• discrimination against, or harassing other employees; or
• having or using illegal substances at work, such as alcohol.

How Does a PILON Clause Work?

When you carry out a summary dismissal with payment in lieu of notice (PILON) rather than simply without notice, it is because you have included a PILON clause within the employment contract. It could be contained in the contract in one of two ways.

Non-Discretionary Payment Instead of Notice (PILON) Clause

This is where the clause states that your employee will receive a non-discretionary payment instead of notice if you dismiss them without giving them the notice required within the employment contract. 

For the employee to receive this payment, they must make a debt claim for it, and where you do not make a payment in lieu of notice, the court will not consider the summary dismissal to be a wrongful one.

Employer’s Discretion When Dismissing an Employee to Make a PILON When Doing So

This is the more likely circumstance of a PILON being relevant to your employee’s contract. It simply means that if you make a summary dismissal, the employment contract allows you the right should you choose to make a PILON when doing so. You should choose to do so, meaning that your employee will be able to make a debt claim for the liquidated sum due. 

Can a Summary Dismissal Be a Wrongful Dismissal?

Wrongful dismissal is not concerned with the fairness of the dismissal. Instead, it is where you dismiss your employee and, by doing so, break their employment contract terms. 

This can be a contract term that is express or implied. In other words, it could be a term that is clearly written into the contract or one which is not but is part of general employment law and relevant to you and your employee’s contract. 

Therefore, summary dismissal is a wrongful dismissal if you summarily dismiss your employee and it is not in response to gross misconduct amounting to a repudiatory breach of their contract. For example, summarily dismissing your employee due to them not performing correctly or consistently being late would not usually cause you to carry out summary dismissal.

Therefore, it is essential that if you decide to summarily dismiss your employee due to gross misconduct, you still investigate the incident or allegation against your employee. This ensures that the gross misconduct did occur and, therefore, that you have a right to dismiss them summarily. You may have a summary dismissal procedure for this in your employment procedures and policies.

Where you use a PILON clause during summary dismissal, the court may consider it to be wrongful dismissal if the PILON clause is one you use at your discretion, and you did not use the discretion the employment contract allows. This means that you did not choose to allow the payment in lieu of notice giving the employee the ability to make a debt claim to receive it.

Key Takeaways

Summary dismissal is a legal form of dismissal when you carry it out in response to your employee’s gross misconduct. However, this must amount to a repudiatory breach of their employment contract. If you are in a position where you need to carry out a summary dismissal, you can do so immediately without notice or with payment in lieu of notice where the employment contract allows. You must also follow a fair procedure when carrying out summary dismissal. Otherwise, the court could consider it to be a wrongful dismissal. In this case, you have broken the employment contract with your employee.

If you need help understanding that summary dismissal of your employees in England and Wales is safe, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So, call us today on 0808 196 8584 or visit our membership page.

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