Why having a good reason to dismiss an employee may not save you from an employee claim

Their relationship had been deteriorating for some time. It stemmed from an inappropriate remark made by John at an office party last year about Geoff's current girlfriend which in a drunken haze seemed to find its way back to Geoff and her. So when Geoff heard that John had been arrested on Saturday night with a group of friends for being drunk and disorderly after a rugby game he seized his moment...

When John turned up to work on Monday he was told that drunk hooligans were not acceptable in the workplace and was asked to leave on 2 weeks notice paid in lieu.

Geoff and John used to be the best of friends

Geoff had helped John get the job at 123 Marketing. It had been a great move for both of them – in the first year John and increased sales by 10% and Geoff had won the kudos of his partners for employing him. Things began to go wrong when Geoff started dating one of his staff. Geoff's attitude to John changed and they saw less of each other on a social basis. John resolved to act professionally and diligently in his work regardless. However, an inappropriate (and loud!) comment about the length of Geoff's girlfriend's skirt at an office function marked the end of their relationship. What John didn't realise was that it also marked the beginning of the end of his job at 123 Marketing.

Why Geoff had no right to end John's employment

Before any employer can dismiss an employee, the employer must first have a genuine reason for dismissal. “Genuine” is a loaded word in this sense because it means two things. First, it means that the reason must be a reason which the law recognises as genuine. Second, the reason must genuinely exist. For Geoff, his reason didn’t fit into either category. The reasons which the law recognises as genuine are as follows:

  • Misconduct
  • Non Performance
  • Redundancy or other economic reasons
  • Abandonment (which is really a form of resignation by the employee
  • A breakdown in the employee relationship of trust and confidence.
For Geoff to be able to successfully fire John he needed to establish a reason which fell into one of these categories. However, the real reason Geoff fired John was because they had fallen out on a personal basis. John knew this which is why he raised a personal grievance on the grounds of unjustified dismissal.

Geoff was called in to see the Company lawyer

When the letter arrived addressed to "The Partners of 123 Marketing" setting out John’s personal grievance Geoff knew he needed to do some quick thinking. His partners wanted to know whether there was any merit in the claim and immediately hauled in the Company lawyer to talk to Geoff. The meeting started with the lawyer explaining that the law recognises only certain genuine reasons for dismissal. Mentally, Geoff started ticking them off in his head...

Doesn’t getting arrested come under misconduct?

Geoff knew that there were no economic reasons for the dismissal and non performance was a non starter, as was abandonment. He didn’t want to raise any issues about his personal relationship with John or his girlfriend – that would have been far too unprofessional and would probably open a can of worms. So, Geoff fell back on his last lifeline which was relying on John’s arrest to establish misconduct. However, as the lawyer explained that argument didn’t stand much chance of success for a number of reasons:
  • The incident occurred away from work and in John's own time;
  • There was no publicity or any other factor surrounding the event which could have brought disrepute on the company;
  • Although arrested John wasn't charged with anything;
  • And if that wasn't enough, the process which Geoff used to terminate the employment was unfair.
Slowly the realisation that Geoff had not only cost the company a valuable sales person but also an unjustified dismissal claim was dawning on both Geoff and his partners. They turned to look at the lawyer in the hope he could offer a miracle cure for their problem...

The lawyer advised a settlement

It was time to cut their losses and talk about settlement. They had very little bargaining power and since the Company's purse was a bit light Geoff saw the payout coming from his drawings. If only he had known that the law required a genuine legal reason to dismiss an employee he would have hesitated before getting rid of John. So, in order not to make the same mistake as John remember that you must have a reason for dismissal which the law recognises as genuine (a good reason in your mind may not do). They are:
  • Misconduct
  • Non Performance
  • Redundancy or other economic reasons
  • Abandonment (which is really a form of resignation by the employee
  • A breakdown in the employee relationship of trust and confidence.
Also that reason must genuinely exist – it is no good having a reason if you can’t substantiate it. Finally, you must follow a fair dismissal process.
Print this pageEmail to a friendUse this article in your newsletter/magazine