There are five potentially fair reasons for the dismissal of any employee under the Employment Rights Act 1996 (ERA 1996):
- Conduct
- Capability
- Redundancy
- Breach of a statutory restriction
- Some other substantial reason of a kind to justify the dismissal (SOSR)
SOSR is a residual “catch-all” potentially fair reason for dismissal. Whilst there is no statutory definition of the term or any statutory guidance, case law has made it clear that the reason must be substantial.
Interpretation of what is substantial is subjective and will depend on the facts and the type of case. The reason must also be of a kind which will justify the dismissal (rather than any lesser sanction) of an employee holding the job the employee actually held.
Common examples of scenarios that may constitute an SOSR dismissal
Protection from competition
Where an employee acts in a way that falls short of a breach of duty or is in a situation that creates a potential conflict with the employer’s interests, the employer may be able to dismiss the employee by relying on SOSR.
The most common types of cases in this category relate to conflict of interest or restrictive covenants.
Cases involving conflicts of interest
To be able to succeed in relying on the risk of competition as being SOSR, the employer must be able to provide evidence to substantiate its perception that the employee poses a risk to its business interests. The evidence will be as to the nature of the information to which the employee has access.
If an employee has limited access to commercial information, an employer will struggle to show that it was concerned about a risk at all. It is also usually necessary to show that the employee has close connections to a competitor (or an employee of a competitor) and that the employer fears the employee may leak confidential information.
To establish an SOSR dismissal, in these circumstances, the employer must show that continuing to employ the employee would give rise to a real commercial risk.
Cases involving restrictive covenants
The scope of any restrictive covenant will have a bearing on whether an employer can rely on it for an SOSR dismissal. Case law has established dismissal following a refusal to enter new restrictive covenants, which was found to be for SOSR and potentially fair.
Personality clashes
Personality clashes or irreconcilable differences between colleagues can amount to SOSR. However, the conflict would have to cause a substantial disruption to the business.
Other examples
- The non-renewal of the fixed-term contract of an employee recruited as maternity leave cover.
- The dismissal of an employee for a theft conviction unconnected with his employment.
- The dismissal and re-engagement of an employee to impose new contractual terms and conditions that the employee has refused to agree to.
The two-stage test for any dismissal will apply notwithstanding the potentially fair reason for the dismissal.
Having identified circumstances giving rise to an SOSR dismissal, the employer must ensure that it follows a fair procedure and acts reasonably in dismissing the employee for that reason, taking into account all the circumstances.
Confused about SOSR dismissals? Call employment partner Karen Cole today to clarify the position.
Note: This article is not legal advice; it provides information of general interest about current legal issues.