Can employers dismiss employees at the request of a client? We look at where employers stand on third-party pressure and how to dismiss fairly.
It’s hard enough to make decisions regarding your staff sometimes, but when others are in a position where they appear to be making that decision for you, how should employers respond?
What is third-party pressure?
Imagine this scenario: you run a cleaning company, and you have a cleaning contract to provide cleaning services to a large office complex. The contract is a key source of income for your business, and your clients are very particular about how this contract is serviced.
You employ a team of cleaning personnel to work on this contract, and all is going well until one day, your client informs you that one of your employees is not up to scratch and they no longer want this person working at their site and on the contract. This is known as ‘third-party’ pressure.
This leaves you in a very precarious position for two reasons:
- You do not want to jeopardise your relationship with your clients and want to keep them happy to avoid what could be very severe financial repercussions for your business if you lose the work.
- The impact this will have on the future employment of the member of staff in question This person has worked for you for many years; this location is ideal for them because they cannot drive and, therefore, travel to other sites to work on other contracts is going to be difficult for them.
While you can’t afford to lose the contract with your client, you certainly can’t afford to lose an employment tribunal. So, where do you stand regarding third-party pressure, avoiding losing a client, and a potential unfair dismissal claim?
Would third-party pressure justify a dismissal?
Potentially yes. Where your client will not reconsider their decision, and you have no other work to offer the employee, this could trigger a dismissal for some other substantial reason or SOSR.
What is SOSR?
There are 5 fair reasons for dismissal:
- Capability (including medical capability)
- Statutory Restriction
- Some other substantial reason (SOSR)
Where the first 4 reasons for terminating an employee’s contract do not apply, yet there is a justifiable reason to terminate the employment contract, this is likely to be a dismissal for SOSR.
In the case where an employer is faced with their client insisting on the removal of a member of staff, it is this ‘pressure’ applied by the third party, i.e., your client, that is the ‘other’ substantial reason for terminating the employee’s contract.
What steps are involved in ensuring this type of dismissal is fair?
The key thing to remember is that any employment termination should be a last resort. While this type of circumstance may appear to be beyond your control, this is not going to justify a failure to follow a fair procedure because you still have a legal duty to ensure that all reasonable steps are taken to avoid a wrongful dismissal and an unfair dismissal claim, regardless of the circumstances.
- Establish the facts. Ask your client to confirm their decision in writing (an email is fine). They should also be asked for the reason they do not wish to continue to allow your members of staff on their premises or serve their contract. Sometimes, third parties refuse to do this, but you should ask all the same.
- Investigate, investigate, investigate! Set up an informal investigation meeting with your employees to let them know about your client’s decision and to ask them to outline their initial explanations for any issues you have been made aware of, e.g., poor work standards and unprofessional conduct. Take notes in this meeting.
- Suspension? If you do not have anywhere else to put this employee while you try to resolve the matter, then you may be faced with placing them on paid suspension. Any paid suspension should be confirmed in writing and be in place for as little time as possible.
- Will your client reconsider their decision and allow the employee to return? Third-party pressure can make this awkward for the employer, and this is something they are often reluctant to request because they fear ‘rocking the boat’, but it is important. If the matter relates to poor standards of work or there may be a genuine misunderstanding, as long as your client knows the matter is being dealt with, they may be inclined to allow the employee to return. This is important because it can often prevent the need for a dismissal.
- Formal hearing with the employee. Where your client will not reconsider, a hearing will need to be convened with your employee to discuss the impact of their removal from the contract or site on their future employment. This hearing should be arranged in writing, setting out the purpose of the hearing, the statutory right to be accompanied by a fellow employee of the company or a trade union official, and the potential outcome of the hearing, i.e., alternative employment or dismissal.
- Alternative employment? This is very important. Where the employee cannot return to their usual place of work, the employer must source alternative employment. This does not mean creating a role, but you do need to reasonably consider alternative employment options. For example, if there are any vacant roles or presumably you will have to switch out another employee from another location or contract to take the place of the employee who has been removed, if so, can the removed employee swap with them? Perhaps the employee also works at other sites and on other contracts, so it may be that it is agreed they will continue to work but on reduced hours.
- Dismissal: Where none of the above can reasonably be accommodated, the employee’s contract will be terminated. Employment termination should be communicated in writing, and the right of appeal should be given. They will also be entitled to notice, which will more than likely need to be paid in lieu, plus any annual leave they have accrued and not taken up to their termination date.
Is the employee obligated to accept alternative employment, and if not, is this a redundancy?
It will depend on the individual circumstances.
Check the contract; if there is a mobility clause in there that requires employees to work at other sites and across other contracts (perhaps they have covered absent employees at other sites in the past), then as long as the alternative role is within a reasonable commuting distance, they should not refuse.
The alternative role may not be suitable if the hours are different from the employee’s original role; again, this may be justifiable grounds for refusal.
This type of dismissal is not a redundancy because the work they were originally employed to carry out is still there. The reason for dismissal is due to your client’s request for their removal from their original place of work; hence, this is a dismissal for some other substantial reason (SOSR).
Remember, even with a fair reason for employment termination, any decision to dismiss should be a last resort and must be reasonable; otherwise, it will be unfair and could lead to an unfair dismissal claim from the employee.
Advice must be sought from Avensure before taking action to dismiss any employee. Don’t delay; contact our experts.
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