Dismissals and Severance Agreements

A dismissal signifies the termination of an employment relationship between an employer and an employee. There can be various reasons for a dismissal, but for it to be valid, a number of rules must be followed. If a dismissal is unjustified, it can have financial consequences for the employer in the form of compensation to the employee. 

Employers may sometimes find it necessary to dismiss an employee. The reasons for this can vary, and dismissals may, in certain situations, occur more indirectly – for example, through significant changes to terms of employment, which in practice may equate to a dismissal accompanied by an offer of a new role. Additionally, a dismissal may be based on circumstances relating to either the company or the employee.

What is a Dismissal? 

A dismissal marks the end of an employment relationship between an employer and an employee. For the termination to be valid, it must be objectively justified. 

Reason for Dismissal 

It is crucial to have a valid reason for a dismissal. As a general rule, any employee can be dismissed as long as the reason is legitimate and well-documented.

Illness as a Reason for Dismissal 

When dismissing an employee due to illness, it is important to consider all relevant factors before making a decision. For instance, you can use this checklist: 

• Duration of the illness: How long has the illness lasted so far? 
• Cause of the illness: Be aware that you are not allowed to inquire about the cause unless it is known. 
• Likelihood of returning to work: Assess if and when the employee can return to work under normal conditions – a medical statement may assist here. 
• Pattern of illness: Consider whether the illness is recurrent or sporadic. 
• Operational impact: Has the employee’s absence significantly affected operations and increased the workload for colleagues? 
• Nature of the role: Is it feasible to find a temporary replacement? 
• Work-related illness: Consider whether the illness might be work-related. 
• Employee’s length of service: As a rule of thumb, greater caution should be exercised when dismissing employees with long service records.

Severance Agreements 

An alternative to dismissal could be a severance agreement, where the employer and employee mutually agree to terminate the employment relationship. However, it is important to note that employees cannot be coerced into accepting a severance agreement, and there are often expectations of some form of compensation, such as an extra month’s salary. The agreement must be precisely and thoroughly formulated to avoid invalidity.

Advice on Employment and Labour Law 

Are you facing the dismissal of an employee or other legal HR challenges? We offer advice to help you, as an employer, navigate difficult situations while adhering to applicable laws and regulations. 

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