What happens if you are an employer and a third-party demands that you dismiss one of your employees? This situation may well arise if you are supplying workers under a service contract and are told by your customer that you will lose the contract unless you remove one of your employees. If you do so, this could result in an unfair dismissal claim, and if you do not, you may lose business which your firm depends upon.

There have been a number of cases on this before the Employment Tribunal and the Court of Appeal. What is certain from these cases is that an employer has a duty to take all reasonable steps to protect the worker. This will certainly involve taking all possible steps to make the third-party change their mind and if this is not possible to find alternative work for the worker.

As is so often the case, argument can revolve round what is reasonable. This will depend upon the circumstances. If the worker is fairly low down the chain and has not been employed for long, then the requirements to keep him in a job may not be too heavy. However, with a long serving employee held in high repute much more will be required.

So what should be the approach of an employer faced with this difficult situation? The following is suggested:

  • Firstly make sure that the third party has indeed issued an ultimatum. Consider the contract and their right to demand a removal of the employer. If the contract contains an arbitration clause, then use it. Should you be faced with an unfair dismissal claim, this will be evidence you need.
  • If you are left with no alternative other than to withdraw the employee, give consideration to the injustice caused to him. Would there be a possibility of reorganising the business by exchanging the withdrawn employee with the person who will take his place? Evidence of the consideration given to reorganising jobs could be necessary to present to a tribunal.

There can be particular problems where the demands of the third-party offend against discrimination legislation and where a dismissal would be automatically unfair. The same principles will, however, apply. An employer who is placed in this situation is unlikely to be penalised if he can show that he has done everything conceivably possible to make the third-party change their mind, and where this has not been possible, has done everything they can to mitigate the injustice caused by the third parties stance.

What you must always remember is that although the third party’s requirements to remove a worker may be fair and reasonable, that will not necessarily mean that it is fair for you to dismiss.