Did you know that you can dismiss an employee in accordance with the terms of their employment agreement and still be liable for unjustifiable dismissal?
Making the decision to terminate an employee’s contract is hardly ever a simple one. You’ve carefully read the contract and seen that you can terminate it without cause, simply by giving notice to the employee. You’ve paid attention to the proper notice period. You’ve made provisions to pay all sums your employee will be entitled to receive. As far as your contractual obligations go, you have covered all your bases. Surely, you would have protected yourself from any claim for compensation by the dismissed employee, correct? Incorrect.
An employment agreement contains the agreed roles, rights, responsibilities and obligations of the employer and employee alike. Much like any other agreement, should either party breach its terms, the affected party is entitled to claim for breach of contract. Most employment contracts allow the employer to terminate the contract without cause, and without the need to tell the employee the reason that he or she is being dismissed. As long as the employer has complied with the termination clause in the contract, the employee would have no right to sue for breach of contract as it relates to the reason for the dismissal or the way in which the dismissal is effected.
Since the mid-1970s, however, laws were introduced to protect an employee from being unfairly dismissed. This change to the statutory regime sought to level the playing field and safeguard the interests of employees, who traditionally would have been on a weaker footing than employers in matters of contract. It was considered that the statutory framework would create a new and separate avenue for employees to pursue claims for unjustifiable dismissal, irrespective of whether there was a breach of the contract by the employer.
To that end, Parliament established the Industrial Disputes Tribunal (“IDT”) as a specialized entity to adjudicate upon disputes between employers and employees, including allegations of unjustifiable dismissal. An employee’s right to claim unjustifiable dismissal before the IDT does not exclude their right to also bring a claim for breach of contract before the courts.
In a dispute concerning alleged unjustifiable dismissal, the IDT is required to enquire into the reason for the employee’s dismissal and ensure that the employer had a fair reason for terminating the contract, and that the termination was done in a manner that respected the employee’s rights to dignity and job security.
Based on statute, the employer must have a valid reason for the dismissal, which may be related to the employee, such as their conduct or performance, or it may be unrelated to the employee, such as the reduced needs of the business for the employee’s services.
The process that the employer is required to follow depends on the reason for dismissal.
If the dismissal is for disciplinary reasons, the employee should be informed in writing of the allegations against them and given the opportunity to defend themselves and be accompanied, by a representative, to any disciplinary hearing that is convened. They should also be given the right to appeal against the decision arrived at coming out of that hearing if they wish. If the dismissal is for reasons related to the employee’s poor performance or because the employer no longer requires the employee’s services, then a disciplinary hearing would not normally be required but another process may be more appropriate to ensure that the employee’s rights and dignity are respected.
The fact that an employer and employee have agreed that either party may terminate the contract without cause simply by giving notice to the other party is seemingly irrelevant to the issue of unjustifiable dismissal of the employee. If the employee claims that they have been unfairly dismissed, the employer may be required by the IDT to prove its reason for dismissal. This is so, irrespective of the fact that the contract permits either party to terminate without cause. If the employer refuses to give a reason for terminating the contract, it may determine that the employer had no good reason at all and therefore the dismissal was unjustifiable. In that circumstance, it can order the employer to reinstate the employee and or to pay the employee compensation.
There is no limit to how much the IDT can award to an employee as compensation. A judge in a court of law would be required to award a sum to the employee that puts them in the same position that they would have been in had the breach of contract not occurred. Thus, if an employee were wrongly dismissed but immediately found a job that paid slightly less, the judge would be required to deduct the salary earned in the subsequent job from the amount of the compensation to be paid to the employee. The IDT is not legally required to do that, and it rarely does.
An employer contemplating whether to dismiss an employee should know that, notwithstanding what their contract says, they may not have the right to remain silent on the reason for dismissal. And anything they say, can be used against them.
Jovan Bowes is an Associate at Myers, Fletcher and Gordon. He may be contacted at email@example.com or through the firm’s website www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.