The Burden of Fairness: Why Procedural Rigour is the Only Shield Against Constructive Dismissal Claims
In the fast-paced environment of an SME, formal procedures are often viewed as "red tape" that hinders agility. When a senior employee’s performance slips or their conduct becomes toxic, the instinctive reaction of a founder is to solve the problem quickly. However, in the eyes of an Employment Tribunal, why you dismissed someone is often less important than how you did it.
Under the Employment Rights Act 1996, for a dismissal to be fair, an employer must not only have a valid reason but must also act reasonably in all the circumstances. This is where many businesses fail: they have a "fair reason" but a "fatally flawed process."
The Ghost of 'Polkey'
A common misconception among business owners is the belief that if an employee "deserved to go," any procedural errors won't matter. This brings us to the Polkey v AE Dayton Services Ltd principle.
While a Tribunal might reduce compensation if they believe the employee would have been dismissed anyway (a "Polkey reduction"), a procedural failure still results in a finding of Unfair Dismissal. For a high-growth SME, this means public judgment, legal fees, and a bruised employer brand—regardless of the final payout.
The Three Pillars of Procedural Rigour
To defend against a claim of Constructive or Unfair Dismissal, your internal ER processes must be built on three non-negotiable pillars:
The Right to Response: It is a fundamental principle of natural justice. You must clearly outline the allegations in writing and provide the evidence before the hearing. "Ambush" disciplinaries are a fast track to a lost claim.
The Neutral Arbiter: Especially in smaller firms, the person investigating the issue should not be the same person making the final decision. Where an SME lacks the internal headcount to separate these roles, the failure to bring in an external consultant to chair the hearing is often cited as proof of "pre-determination."
The 'Range of Reasonable Responses': The Tribunal will not ask "What would I have done?" but rather "Could a reasonable employer have acted this way?" Documenting the rationale behind the sanction—and why lesser sanctions (like a Final Written Warning) were dismissed—is your primary shield.
The Trap of 'Custom and Practice'
Many senior leaders rely on "how we do things here" rather than what is written in the contract or the ACAS Code of Practice. If your staff handbook has gathered dust since 2018, your "custom and practice" may actually be a breach of the implied term of mutual trust and confidence.
Once that trust is breached by a sloppy process, a Senior Executive has the leverage to resign and claim Constructive Unfair Dismissal, arguing that the employer's conduct made their continued employment impossible.
The Nexus Edge
Procedural rigour is not about being bureaucratic; it is about being bulletproof. At Nexus Employment Consultancy, we act as the objective, senior-level presence that ensures your internal investigations and hearings are conducted with forensic precision. We don’t just manage the exit; we manage the risk.
