UNIT 5: MANAGING DISMISSAL

Learner Outcomes:

Upon successful completion of this unit, learners will be able to:

1. differentiate between dismissal and termination

2. determine the grounds for dismissal
3. determine the possible steps for employee dismissal/termination
4. critically examine legal issues surrounding dismissal of an employee
5. examine compensation issues relating to dismissal
6. evaluate the reasons for layoffs, downsizing, mergers, and retirement

Content:

1. Dismissal or Termination:
a. Grounds for Dismissal
i. Unsatisfactory performance
ii. Misconduct
iii. Lack of qualifications
iv. Changed job requirements
b. Possible steps for employee dismissal
c. The termination/exit interview
2. Layoffs, mergers, downsizing, contract termination and retirement
a. Layoffs:
i. Bumping/layoff procedures
ii. Alternatives to layoff
b. Mergers and downsizing
c. Guidelines to mergers/downsizing
d. Retirements:
i. Pre-retirement Counselling
ii. Common pre-retirement practices
iii. Retirement payment plans
e. Contract Termination
3. Legal issues surrounding dismissal
Differentiate between dismissal and termination.
Termination is the end of the contract, whereas, in dismissal, the employee can be acquitted of
his charges by a court and reinstated back to his job. In termination, there are no benefits for the
employee while there may be some benefits allowed by the management in the case of dismissal.
Dismissal is a sort of punishment for a delinquent employee in case of lost of trust in employee
performance. It could also be a situation in which an employer officially makes
someone leave their job:
The grounds for dismissal can vary depending on the jurisdiction and specific workplace
policies, but generally, they include:

1. Unsatisfactory Performance: This occurs when an employee is unable to meet the

performance standards required in their role. Employers typically need to follow a fair
process, which includes providing the employee with an opportunity to improve through
a performance management process. If there’s no improvement, dismissal may be
considered.

2. Misconduct: This includes behavior that is not acceptable in the workplace, such as
persistent lateness, unauthorized absence, or more serious offenses like theft or
violence. Employers should have a clear disciplinary process in place, and dismissal for
misconduct should follow a fair and transparent procedure.

3. Lack of Qualifications: If an employee does not have the necessary qualifications for
their position, which were either required at the time of hiring or became necessary due to
changes in the job, this can be grounds for dismissal. However, employers should
consider whether the employee could obtain the required qualifications before deciding to
dismiss.

4. Changed Job Requirements: If the job evolves and the current employee cannot meet
the new requirements, even after training or support, dismissal might be
necessary. Employers should ensure that changes in job requirements are genuine and not
used as an unfair reason to dismiss an employee.
It’s important for employers to follow legal guidelines and internal policies when considering
dismissal to avoid unfair dismissal claims. The Acas Code of Practice on Disciplinary and
Grievance Procedures is one such guideline that provides a framework for handling such
situations fairly.

The Acas Code of Practice on Disciplinary and Grievance Procedures (the Acas Code )
provides guidance to help employers ensure their obligations towards their employees
are met during instances of poor performance.
Possible steps for employee dismissal
Terminating an employee is a sensitive process that should be handled professionally and
ethically to ensure a smooth transition and to protect the company from potential litigation. Here
are some possible steps for employee dismissal:

1. Document Issues and Warnings: Before termination, document all issues leading to this
decision, including performance reviews and written warnings.

2. Communicate Problems: Clearly communicate with the employee about performance or

behavior issues as they occur.

3. Develop an Improvement Plan: If possible, create a plan with the employee for
improvement and set measurable goals.

4. Prepare Documentation: Have all necessary documentation ready, such as a written

notice of termination and any relevant correspondence.

5. Determine Severance: Calculate appropriate severance pay, if necessary, and ensure it

complies with employment legislation.

6. Conduct a Termination Meeting: Hold a face-to-face meeting to discuss the

termination, providing the employee with the reasons and documentation for the decision.

7. Allow Dignity in Departure: Allow the employee to leave with dignity, respecting their
contributions and providing closure.

8. Right to Appeal: Remind the employee of their right to appeal the decision.

What is the Termination/Exit Interview

An exit interview is a meeting between an employee who is leaving a company and a

representative from the company, often from the human resources department. The purpose of
this interview is to discuss the employee’s reasons for leaving and to gather feedback about their
experience working at the company. This feedback can be valuable for the company to
understand potential areas of improvement and to maintain a positive relationship with the
departing employee.

During the exit interview, the employee may be asked about various aspects of their job, their
satisfaction with the company, and suggestions for changes. It’s a chance for the employee to
share their thoughts openly and for the company to gain insights that could help retain current
and future employees. It’s also an opportunity for closure and to end the employment
relationship on good terms.

Terms
  Layoffs: This is when employees are let go from their jobs due to business reasons that
are not related to their individual performance. It can be a temporary or permanent
separation, and often happens when a company needs to cut costs or is restructuring.

 Mergers: This occurs when two companies combine to form one new company. Mergers
can lead to organizational changes, including the integration of staff, systems, and
processes.

 Downsizing: This is a deliberate reduction in a company’s workforce to improve its

efficiency and financial health. Downsizing is often used interchangeably with layoffs,
but it specifically refers to the strategy of reducing the size of the company to cut costs.

 Contract Termination: This happens when an agreement between an employer and

employee is ended. It can occur for various reasons, including the completion of the work
for which the contract was made, mutual agreement, or breach of contract terms.

 Retirement: This is when an employee voluntarily ends their career, usually due to age
or personal choice. Retirement typically involves the employee stepping down from their
position and no longer working on a full-time basis.

Bumping/Layoff Procedures
“Bumping” refers to a process used during layoffs where an employee whose position is being
eliminated can “bump” another employee with less seniority and take their position. This is often
based on a system of seniority, where longer-serving employees have the right to displace those
with less service time in order to retain employment within the organization.
Layoff procedures are the formal processes that an organization follows when it needs to reduce
its workforce. These procedures typically involve determining which positions will be eliminated
and which employees will be affected. Factors such as tenure, performance, and operational
needs are considered. In some cases, employees may be offered severance packages or assistance
in finding new employment.

Alternatives for Layoffs

There are several strategies that organizations can consider to avoid or minimize the need for
layoffs:

1. Remote Work: Allowing employees to work remotely can reduce the need for office
space, thereby saving costs and potentially avoiding layoffs.
2. Furloughs: Temporarily sending workers home without pay, with the intention of calling
them back when the financial situation improves.
 3. Job Sharing: Two or more employees share the responsibilities of one full-time position,
working part-time or reduced hours.
4. Reductions in Pay: Implementing temporary pay cuts across the organization to reduce
overall salary expenses.
5. Hiring Freezes and Attrition: Stopping new hiring and allowing the workforce to
reduce naturally through attrition.
6. Cuts in Benefits and Perks: Reducing non-salary compensation such as bonuses, free
meals, or other perks to save costs.

These alternatives can help maintain employment levels while managing financial constraints.
Each option has its own set of considerations and should be evaluated based on the
organization’s specific circumstances and workforce needs.

What are some guidelines to Mergers/Downsizing

When it comes to mergers and downsizing, there are several guidelines and considerations that
organizations typically follow to ensure the process is carried out effectively and ethically:
1. Strategic Planning: Organizations should approach downsizing strategically,
considering the long-term goals and how the process aligns with the company’s vision.
2. Legal Considerations: It’s crucial to be aware of the legal implications of downsizing,
including compliance with labor laws and regulations to avoid potential lawsuits.
3. Communication: Clear and transparent communication with all stakeholders, including
employees, customers, and shareholders, is essential throughout the process.
4. Employee Support: Providing support to affected employees, such as severance
packages, outplacement services, and counseling, can help mitigate the negative impact
of downsizing.
5. Alternatives to Layoffs: Before resorting to layoffs, companies should consider
alternatives like voluntary separation, early retirement offers, or temporary reductions in
work hours.
6. Impact on Remaining Employees: The morale and productivity of the remaining
workforce can be affected by downsizing. Plans to manage this impact should be in
place1.
 7. Cost Management: Organizations need to consider the costs associated with downsizing,
such as severance pay, and weigh them against the savings from reduced headcount.
8. Antitrust Considerations: In the case of mergers, companies must adhere to antitrust
guidelines to prevent unfair competition and ensure market fairness.

These guidelines aim to balance the needs of the organization with the welfare of its employees
and the legal requirements. It’s a complex process that requires careful consideration and
planning to achieve the desired outcomes while minimizing negative consequences.

Retirements

Pre-retirement counseling, common pre-retirement practices, and retirement payment plans are
all important aspects of preparing for retirement. Here’s a brief overview of each:
Pre-retirement Counseling: Pre-retirement counseling is a service provided to employees who
are nearing retirement. It covers various topics such as benefits advice, second careers, health
maintenance, and lifestyle adjustments. The goal is to help individuals transition smoothly into
retirement by addressing financial, emotional, and practical considerations.
Common Pre-retirement Practices: These practices involve steps taken by individuals to
prepare for retirement. Common practices include assessing retirement goals, estimating
retirement income, creating a retirement budget, developing investment strategies, managing
debt, and considering lifestyle changes. These steps help ensure financial security and a fulfilling
life post-retirement.
Retirement Payment Plans: Retirement payment plans refer to the financial strategies that
combine savings and investments to provide income during retirement. Some of the best
retirement plans include Individual Retirement Accounts (IRAs), annuities, 401(k) plans, and
other defined contribution plans. These plans offer various tax advantages and can be tailored to
individual needs. Several financial institutions in Jamaica offers many types of retirement
payment plans

It’s important to start planning early and consider all these aspects to ensure a comfortable and
secure retirement.
What is Contract Termination

Contract termination refers to the end of a contract’s validity, which can occur before the actual
completion of all terms and conditions outlined in the contract. It can happen for various reasons,
such as mutual agreement, breach of contract by one of the parties, or external circumstances that
make the fulfillment of the contract impossible. When a contract is terminated, the parties
involved are no longer obligated to continue with the contract’s terms, although they may still
have certain rights or obligations that accrued up to the point of termination. For instance, a party
may still be entitled to payment for services or goods provided before the contract was
terminated.

What are some Legal Issues Surrounding Dismissals

Legal issues surrounding dismissals often revolve around ensuring that the dismissal is fair and
lawful. Here are some key points to consider:

 Valid Legal Reason: Employers must have a valid legal reason for dismissing an
employee, which should be reasonable and within the law.
 Fair Procedure: Employers should follow a fair procedure as prescribed by legislation
and guidelines such as those from the Advisory, Conciliation and Arbitration Service
(ACAS) in the UK.
 Employee Rights: Dismissal must adhere to employee rights outlined in relevant
employment laws, such as the Employment Rights Act 1966.
 Investigation: An investigation into the circumstances leading to the dismissal should be
carried out.
 Communication: The employee should be informed that they are under consideration for
dismissal and the reasons why.
 Representation: During any disciplinary or dismissal hearings, the employee may be
accompanied by a third party.
 Appeal: The employee should be offered a chance to appeal the decision.
 Fair Dismissal Reasons: These can include redundancy, serious illness, conduct,
capability, legal inability to continue employment, summary dismissal for gross
misconduct, or other substantial reasons.
  Unfair Dismissal: If an employer has not followed the ACAS guidance during a
disciplinary or dismissal procedure, and the employee is found to have been unfairly
dismissed, the award may be increased by up to 25%.

The dismissal of an employee is a complex process that must be handled with care to avoid legal
repercussions. Here are some key legal issues that can affect the dismissal:
1. Employment Contracts: If there is an employment agreement in place, it must be
followed. Violating the terms can lead to wrongful termination claims.
2. At-Will Employment: Many employees are at-will, meaning they can be dismissed for
any reason or no reason at all. However, even at-will employees cannot be terminated for
unlawful reasons such as discrimination.
3. Company Policies: Employers should adhere to their own disciplinary and termination
policies. Failure to do so can result in discrimination claims or other legal issues.
4. Documentation: It’s crucial to have documentation supporting the reasons for
termination. This can include performance reviews, disciplinary actions, and any notices
given to the employee about their performance.
5. Lawful Reasons: Dismissal must be for lawful reasons. Improper reasons include
discrimination, retaliation, or any other action that violates state or federal laws.
6. Discrimination Laws: Federal and state laws protect employees from discrimination
based on race, color, religion, sex, national origin, age, disability, and other protected
characteristics.
7. Retaliation: Employers cannot terminate an employee for exercising their rights, such as
taking family or medical leave, whistleblowing, or filing a complaint about workplace
safety.
8. Final Paychecks: Employers must comply with state laws regarding the issuance of final
paychecks. Some states require that it be given on the last day of work.
9. Employee Benefits: If applicable, information about COBRA coverage or other benefits
must be provided to the employee upon termination.
10. WARN Act: For larger layoffs, the federal Worker Adjustment and Retraining
Notification (WARN) Act requires employers to provide advance notice of mass layoffs.
It’s advisable for employers to consult with legal counsel when considering the termination of an
employee to ensure compliance with all relevant laws and regulations. This can help prevent
potential lawsuits and ensure a fair process for all parties involved.

Five fair reasons for dismissal include:

1. Conduct: An employee can be dismissed due to their behavior at work. Example, an
employee committing Fraud.
2. Capability or performance: An employee may be fairly dismissed if they lack the
ability, skills, or qualifications for their role.
3. Redundancy: When the job is no longer needed.
4. Statutory illegality or breach of a statutory restriction: If the employment cannot
continue without breaking the law.
5. Some other substantial reason (SOSR).

Exam Past Paper Question

1. Discuss the legal issues that can affect the dismissal of an employee.
 Noncompliance with the law (employment and termination act)
 Discrimination
 Equity
 Have any of the employee right been breached (contract, promises etc.)
 Have the companies dismissal and termination policy been followed.
2. Outline the steps a HRM practitioner must take to avoid the legal issues identified.
 Set up employment policies and dispute resolution procedures that make
employees feel treated fairly.
 Do the preparatory work that helps to avoid legal issues such as following the
steps for employee dismissal: i. Feedback on performance ii. Employee
training
i. Follow proper Documentation.
 Comply with the law.
 Comply with the contractual arrangement stated or implied by the firm via its
employment application forms, employee manuals, or other promises.

Question 5
A. An employee may be separated from an organization for numerous reasons. With the use
of examples, explain the difference between the following concepts:
 Dismissal
  Layoffs
 Mergers
 Downsizing
 Contract termination
 Exit interview

Dismissal: Termination of the contract of employment of an employee by his or her employer in

a correct, fair, and lawful manner. Usually dismissal takes place due to misconduct on the part of
the employee.

Merger: an agreement that unites two existing companies into one new company. Specifically it
is a voluntary amalgamation of two firms on roughly equal terms into one new legal entity.
Mergers are effected by exchange of the pre-merger stock (shares) for the stock of the new firm.
Owners of each pre-merger firm continue as owners, and the resources of the merging entities
are pooled for the benefit of the new entity. If the merged entities were competitors, the merger
is called horizontal integration, if they were supplier or customer of one another, it is called
vertical integration.

Layoffs: Suspension or termination of employment (with or without notice) by the employer or

management. Layoffs are not caused by any fault of the employees but by reasons such as lack of
work, cash, or material. Permanent layoff is called redundancy.

Downsizing: is the act of reducing the number of employees on the operating payroll.
Downsizing intends to be a permanent downscaling of employed staff. Businesses use several
techniques in downsizing, including providing incentives to take early retirement and transfer to
subsidiary companies, but the most common technique is to simply terminate the employment of
a certain number of people. Downsizing is the releasing of employees because the operation no
longer needs them; reorganization or restructuring of the institution has eliminated jobs. The role
of HR managers in downsizing is to help develop an employee plan for downsizing, which
should include such important issues as attrition management, alternatives to involuntary
separation, outplacement, and workforce distribution after downsizing, identification of
competencies needed by employees taking on new or increased responsibilities, training and re-
skilling program etc.

Contract Termination: To terminate a contract means to end the contract prior to it being fully
performed by the parties. In other words prior to the parties performing all of their respective
obligations required by the contract, their duty to perform these obligations ceases to exist.

Exit interviews: are interviews conducted with departing employees, just before they leave. An
exit interview is a meeting between an employee who has resigned or been terminated and the
company's Human Resources department.
5b. Explain the main guidelines that companies should consider when terminating an
employee so as to avoid negative legal repercussions.
1. Is the employee in a protected class or has the employee filed a complaint or charge? Analyze
in advance if you might have exposure to claims of discrimination or a possible retaliation,
interference, or whistle blower claim by an employee who has recently complained to the
company or an outside agency.
2. What is the employee's seniority? Unless the employee is being fired for a discrete act of
misconduct, firing long-term employees, particularly those with strong performance records, can
be more problematic.
3. What specific reason(s) will be given for the termination and how do those reasons square
with your handbook or written policies? Just because “at-will” employment technically allows
for termination without cause, the reality is that you must have clearly articulated reasons for
terminating before you act. Juries are hard pressed to believe that an employer fired someone for
"no reason," and they fully expect the employer to articulate a justifiable basis for the
termination. Are the reasons you plan to articulate consistent with your company's policies,
practices and procedures?
4. How strong is the evidence? Did you review all the evidence before making a final decision?
Consider whether a neutral third party would agree that termination was justifiable, given the
nature of the conduct or the seriousness of the performance problems.
5. Is there documentation and, if so, how strong is it? The three keys to successful personnel
management are document, document, and document. You should have been documenting
meetings, emails, significant events, performance and/or conduct issues, etc. If you don't have
adequate documentation, think twice before acting.
6. Are there performance evaluations and, if so, what do they say? Performance evaluations often
are given special weight by any person, judge, jury or agency reviewing your action. And we all
know that performance evaluations frequently are not given the care and attention they deserve,
which can be problematic if they reflect a glowing performance leading up to the termination. If,
for example you have an employee with years of evaluations stating they are performing
satisfactorily or better, who has received a promotion or pay increase, you need to consider the
impact of this history in connection with the basis for termination.
7. Have there been similar situations in the past and, if so, how were they handled? It is critical to
handle similar situations in a similar way. If there is an employee manual that sets forth
disciplinary procedures, ensure they are followed. To give more favorable treatment to one
person over another, without clearly articulable objective reasons for doing so, may create issues
that need explanation or justification if litigation ensues.
8. Have I drafted a termination memo that clearly sets forth the reasons for termination? Taking
the time to prepare a termination memo setting forth the reasons for termination forces you to
organize your thinking before taking an adverse action. More importantly, this document will
become a critical part, indeed, a critical exhibit, in your defense to any administrative charge or
lawsuit. Finally, having and citing to a termination memo ensures that you have articulated clear
and consistent reasons for the action.
9. Have I considered reasonable alternatives to termination? It is often helpful to be able to
assess if there are alternatives to termination (e.g., suspension, final warning, performance
improvement plan, demotion, etc.) before firing the employee.
10. Did I call my attorney BEFORE I took action? It's a lot less expensive to engage your lawyer
in “preventive legal maintenance” than to have your lawyer defend you in a lawsuit where you
may not have acted to protect the company.

Other considerations:

1. Don't fire an employee on an emotional basis.

2. Do the termination face-to-face and accord the employee the respect and dignity you would
want if being terminated. Avoid the blame game. Listen with respect to what the employee has to
say and provide an opportunity for the employee to tell his or her side of the story. If you hear
new information that, if accurate, might change your mind, you can postpone termination
pending further investigation. Above all else, avoid derogatory comments or violations of
privacy regarding an employee during termination.
3. Be honest. You might be tempted to tell an employee that the company is downsizing or
consolidating, or come up with some other story to make the employee feel better about himself
or herself. Don’t do it. Be honest and straightforward.
4. Consider allowing the employee to resign in lieu of termination and offer a severance package,
perhaps in exchange for a release. This really depends on the circumstances. Not all companies
can, but if you can offer severance pay, additional education, job skills training or other benefits,
the departure of the employee will have a less negative impact on the employee and the
company.
5. Change all computer passwords. Prevent access to company documents immediately upon
termination. Do not let the terminated employee have access to the system again, even remotely.
6. Discuss the employee’s departure with the staff. Don’t get into specifics, but let the staff know
that the specific employee is no longer with the company.