Under the Employment Rights Act 1996 (ERA), there are 5 fair reasons to dismiss an employee:
- Conduct
- Capability
- Redundancy
- Statutory Ban
- SOSR
When an employee has more than two years’ service, there are two tests for two claims that need to be applied when determining whether a dismissal is fair.
- Unfair dismissal – This determines whether the dismissal itself would be classified as within the bands of reasonable responses
- Wrongful dismissal – This determines whether there has been a fundamental breach of the employment relationship that would allow the employer to dismiss without notice
The two tests are significantly different to the other and need to be looked at independently.
A dismissal under SOSR, if the process was followed correctly and the right outcome reached, would pass the test for unfair dismissal i.e.
- the dismissal would be within the bands of reasonable responses,
but it wouldn’t pass the test for wrongful dismissal i.e.
- there will have been no fundamental breach of the employment relationship.
This means that an employee dismissed under SOSR would still need to be entitled to their notice.
What reasons can an employer use SOSR?
There is a range of reasons that an employer may need to go down the route of SOSR as opposed to the other 4 fair reasons to terminate a contract of employment:
Business reorganisation
(that does not fall under Redundancy)
Redundancy is where there has been a diminishment in the work and therefore the need for the number of employees.
Where this is not the case, and the company is reorganising the workforce with no loss of jobs, SOSR may be deemed an alternative fair reason for the dismissal.
Changes to Terms and Conditions
Where an employer needs to make changes to an employee’s terms and conditions, SOSR may be deemed the appropriate course of action.
The termination under SOSR in this situation does not necessarily have to lead to the loss of a job for the employee.
Should they accept the new terms laid out at the end of the notice period, then they will carry on working.
Should they refuse at the end of the notice period, it is then their employment will be terminated.
The business will have to show that the reason for going through the SOSR process is justified.
Most of the time this is established within a business case under ETO reasons (Economic, Technical or Organisational), although that is not always the case.
Where the changes affect 20 or more employees, the employer must follow a collective consultation as this SOSR would fall under the provisions of the Trade Union and Labour Relations (Consolidation) Act 1992.
Failure to collectively consult could open the business up for a failure to consult claim which could cost the business up to 90 days’ gross pay per employee.
Conflict of interest with the company
Unlike a direct conflict of interest where the employee is actively working in competition with you which could be deemed gross misconduct and breach of contract, the conflict under SOSR could be where there is a commercial conflict of interest where the employee has a close relationship with someone who works for a competitor. The employer will have to determine how much confidential information that the employee is privy to, and how close the relationship is between the two in order to assess whether dismissal under this heading would fall under the band of reasonable responses.
Irreconcilable differences between employees that cannot be resolved
As with any workplace, there will occasionally be a situation where personalities clash.
Should this occur, and despite the best efforts of the employer, no resolution be found, it could be that an SOSR dismissal in this circumstance is found to be a reasonable course of action to take as the only way to resolve the matters.
Naturally, the company will have to explore all alternatives before dismissal i.e.
- Could one employee be moved to another location/office?
- Can the two remain apart or report to different managers?
Third-Party Pressure (3rd PP)
These situations generally arise when the company is contracted to provide a service to a client, and the client is then unwilling to work with the employee or have the employee working on their situation.
Where a situation like this arises, the best practice in the first instance is to try and champion the employee’s cause and resolve the matter with the client to allow the employee to be engaged on the contract.
Where this fails and the client flat out refuses and will not work with the employee, then the employer could look to an SOSR process to resolve this issue.
The employer will need to look at all alternatives before any dismissal takes place to determine it was within the bands of reasonable responses (with employees that have more than 2 years’ service).
This can include looking at alternative sites if any are available and relocating the employee there.
Breakdown in trust and confidence
A highly subjective one within the reasons that a dismissal under SOSR could be deemed within the band of reasonable responses.
Generally, something will have happened that triggered the employer to believe that there has been a breakdown in trust and confidence.
The company must ensure that the reasons for the dismissal do not overlap with other reasons such as to conduct or capability that could make a dismissal under SOSR procedural flawed and therefore give rise to an unfair dismissal claim (with employees that have more than two years’ service).
Expiry of a fixed-term contract
The expiry of a fixed-term contract could fall under either redundancy or SOSR.
If there has been a diminishment of the work that is carried out i.e. it was a fixed-term project-based contract, then the reason for dismissal would fall under redundancy.
However, in the situations where the work is still there i.e. the employee was brought in to cover maternity or long-term absence coverage, and the employee then returns to the role, in these situations, the dismissal would be for reasons related to SOSR rather than redundancy.
It is best practice to ensure that the employee has all the information regarding the role and when it is due to come to an end so that they are aware of the end date, and that the appropriate notice has been given to avoid the employer then being responsible for the notice period at the end of the contract if they failed to give the appropriate amount of notice.
Reputation Damage
As with the breakdown in trust and confidence, reputational damage is a highly subject reason that an employer may use to terminate on the grounds of SOSR.
When determining whether true reputation damage has occurred, the employer must look at multiple factors.
What has occurred to give rise to the reputational damage? How far has the damage reached i.e. social media, local/national press?
These situations can arise for example if the employee has been accused of a criminal offense and this reaches the local/national community and the company the employee works for comes under the spotlight.
In 2020 during the COVID pandemic, a number of cases came about where employees who worked in care homes were seen to be breaching lockdown rules and people named the company all over social media.
What process must be followed?
There is no set process for SOSR laid out in any Acts or Regulations.
The key when carrying out an SOSR process is that the employer is acting reasonably throughout and that the end outcome can be determined to be within the bands of reasonable responses to protect them from an unfair dismissal claim for employees that have more than two years’ service.
This means following the usual process to determine whether an outcome passes this test.
Carry out the appropriate investigations, gather as much evidence and information for the situation that as a company you can, and then make a fully informed decision as to what the outcome should be.
Given how subjective SOSR can be, it would be advisable to get advice as there are leading cases for each of the previously mentioned scenarios whereby Employment Appeal Tribunals have laid out judgments and rulings to help steer employers in the right direction.
What about employees with less than two years’ service?
This article has focussed solely on those employees with more than two years’ service, as the employee will need that length of service in Great Britain to bring a claim for unfair dismissal (unless the reason for dismissal falls under an automatically unfair reason).
Where an employee has less than 2 years’ service, and the employer dismisses with a notice under a true SOSR reason, then the employee has little recourse to take as they don’t have the appropriate length of service to ask an Employment Tribunal to determine whether the dismissal was within the bands of reasonable responses, which is the test for unfair dismissal.
Therefore, as long as the true reason is a genuine SOSR and not for a reason deemed automatically unfair, the employer has very little to worry about as long as the notice period is adhered to.
To find out more about how NORi HR can help and support on this sensitive issue, contact NORi HR & Employment Law on 01254 947829 or use our online contact form and we’ll get back to you as soon as possible.
