Alternatives to employee dismissal

Dismissing employees should always be a last resort. Firstly, because it’s much better to avoid the staff turnover and employee relations costs that come with firing someone. And secondly, letting an employee go always carries the risk of an unfair dismissal claim.

It’s usually better to resolve performance or conduct issues and retain the skills and knowledge of your staff. Here are some useful alternatives to employee dismissal.

Try to resolve issues informally

When a problem with an employee arises, your first response should be to try resolving things informally (assuming the problem isn’t really serious, like a theft or violent attack).

You can hold a meeting with the employee, address your concerns and agree on a course of action. Follow up with a review meeting later, to make sure the action has been taken. In most cases, this will be enough to sort the problem out.

Use formal disciplinary procedures

If the issue is serious, or informal efforts have failed, using your organisation’s formal disciplinary procedure is the next step.

Formal disciplinary procedures can be used when an employee is suspected of misconduct, is under-performing, or has unacceptable absences. All these can lead to dismissal — but not before you follow an Acas-friendly process that includes a full investigation, clear communication, a meeting with the employee, and the right of appeal.

Issue a formal warning or put them on probation

Even if your formal disciplinary procedure finds the employee firmly in the wrong, you don’t have to dismiss them. You could give them a final opportunity to improve their performance, by issuing a formal warning or placing them on probation.

Probation should be for a fixed period of time. You should let the employee know what improvement you expect and provide support, such as training, to achieve it. Depending on the terms of the employment contract, you may be able to withhold certain benefits and provide shorter notice of dismissal while the employee is on probation.

Offer alternative employment

If the employee is underperforming, a useful alternative to dismissal is to find a suitable alternative role for them.

Offering alternative work should be a last resort before dismissal — you should use disciplinary procedures first. The new role does not have to offer the same level of pay or conditions. Offering alternative work may count in your favour if the employee claims unfair dismissal and the tribunal must decide whether you acted fairly.

Agree on a settlement and part by mutual agreement

If you decide the employee really has to go, dismissal is still not the only option. You can also negotiate a settlement agreement with the employee, the terms of which could include termination by mutual consent rather than dismissal.

The agreement will usually involve a financial settlement payment from you to the employee, in return for the employee waiving their right to make a legal claim.