How-to guide: How to carry out a fair dismissal on the grounds of SOSR (UK)

Introduction

This guide will assist in house counsel, private practice lawyers, and HR professionals with navigating the complexities of Some Other Substantial Reason (‘SOSR’) dismissals in England, Wales and Scotland (GB). This guide does not cover employment law in Northern Ireland. It addresses the legal framework, common scenarios and procedural requirements associated with SOSR, offering insights into ensuring fairness, compliance and procedural integrity.

This guide covers:

Introduction to SOSR dismissals
Common examples of SOSR
Key considerations when carrying out SOSR dismissals

This guide can be used in conjunction with How-to guides: How to carry out a fair termination of employment and Overview of workplace discrimination and harassment law and Checklist: An employer’s guide to fire and rehire.

Employers should be aware that the Employment Rights Bill 2024, introduced on 10 October 2024, aims to significantly enhance worker protections in the UK. Key provisions include granting day-one rights for unfair dismissal, paternity, parental, and bereavement leave, changes to sick pay and flexible working rights, protections against zero-hours contracts and restrictions on the use of ‘fire and rehire’ practices. New legislation will be introduced throughout 2025 and 2026. Further information can be found at UK Parliament: Employment rights bill and Employment Rights Bill: factsheets.

Section 1 – Introduction to SOSR dismissals

1.1 Legal basis

There are five potentially fair reasons for dismissal set out in section 98, Employment Rights Act 1996 (ERA 1996):

capability or qualifications;
conduct;
redundancy;
statutory restriction; or
some other substantial reason, commonly known as SOSR.

SOSR provides a potentially fair reason for dismissal of an employee under circumstances that do not neatly fall into the more rigid categories, such as misconduct or redundancy. Unlike dismissals for conduct, capability, redundancy or statutory restriction, SOSR dismissals cover a wide range of situations.

1.2 How SOSR differs from the other fair reasons

The essence of SOSR lies in its capacity to maintain employment flexibility, enabling employers to respond effectively to changing business landscapes or internal workplace dynamics. However, this flexibility does not come without constraints.

Employers often find it difficult to determine whether a potential reason for dismissal falls within SOSR or one of the other categories of dismissal, and there can be a degree of overlap between reasons. For example, SOSR dismissals due to a business reorganisation can be difficult to distinguish from a redundancy dismissal, and a dismissal due to an employee’s imprisonment might overlap with a conduct dismissal due to the employee’s criminal offence. A detailed analysis of the relevant facts is required in each case.

1.3 Requirements for an SOSR dismissal

The law requires that the reason for dismissal under SOSR must be ‘substantial’, meaning it should significantly affect the employment relationship. This is assessed on a case-by-case basis, considering the impact of the reason on both the employer’s business and the employee’s continued employment.

For a reason to be deemed substantial, it must not only be serious but also relevant to the specific circumstances of the employment or the operation of the business. Factors that contribute to the substantiality of a reason can include, but are not limited to, the necessity for operational changes, the need to preserve business integrity, or the requirement to comply with new regulatory standards.

Section 2 – Common examples of SOSR

As would be expected with such a wide-ranging concept, SOSR has been used as a reason for dismissal in a wide variety of circumstances, including, but not limited to the following.

2.1 Business reorganisation

Business reorganisation is a frequently relied on example of an SOSR dismissal and reflects the evolving needs and structures within an employing organisation. This reason includes changes such as alterations in the operational model, shifts in strategic direction, or mergers and acquisitions, which necessitate adjustments in the workforce. Such reorganisations are aimed at enhancing efficiency, competitiveness or adapting to market changes, and may result in employers having different requirements for their workforce. Although such changes can lead to job roles being removed or altered, often the changes may not result in a redundancy situation as defined by law, and so SOSR may be relevant. In Banks v St Albans City and District Council (ET 3322720/16) the removal of a layer of management and downgrading of a manager was SOSR and not redundancy.

2.2 Refusal to accept a change in terms and conditions

The practice of ‘fire and rehire’ (also known as ‘dismiss and re-engage’) is a controversial application of SOSR. This approach is typically considered when an employer needs to implement significant changes to employment terms that cannot be agreed upon with the employees or their union. It must be conducted with extreme caution to avoid legal pitfalls and reputational damage.

The legality of dismissals under this category hinge on the employer’s ability to demonstrate that the need for changes is genuine and substantial, and not an attempt to unjustly reduce employee benefits or rights. For example, in Nattrass v Domestic and General Ltd ET Case No. 2602083/16 the claimant was dismissed when they refused to sign up to new terms regarding working on bank holidays, which the tribunal found was for SOSR.

There is a statutory code of practice on dismissal and re-engagement, introduced on 18 July 2024, which aims to curtail the misuse of fire and rehire practices by employers. For further information see Checklist: An employer’s guide to fire and rehire.

2.3 Breakdown in relationships/personality disputes

This situation typically arises when the working relationship between an employee and their employer (or a colleague) has deteriorated to the point where it significantly affects the employer’s operations or the workplace environment, making it untenable for the parties involved to continue working together.

For a dismissal to be fair on the grounds of a breakdown in relations, employers must demonstrate that the breakdown is significant and irreparable, impacting the employee’s ability to perform their role effectively or affecting the overall performance of a team, department or business. This requires a careful and objective assessment of the situation, including attempts to resolve the dispute through mediation, counselling or other conflict resolution strategies. Employers should document these efforts to show that dismissal was the last resort after exhausting all feasible alternatives to mend the relationship.

It is crucial that an employer does not take sides in a workplace dispute without thorough investigation. Employers must ensure that any decision to dismiss is based on a fair and balanced consideration of all parties’ perspectives and behaviours. The fairness of the dismissal also depends on following a proper procedural process, including giving the employee(s) involved a chance to respond to the allegations against them, considering their responses carefully, and exploring all possible solutions short of dismissal.

2.4 Conflicts of interest

Conflicts of interest arise when an employee’s personal interests significantly interfere with their professional obligations or the employer’s business interests, constituting a valid reason for dismissal. These conflicts can manifest in various forms, such as an employee starting a competing business, having a significant stake in a competitor’s company, or engaging in activities that compromise the employer’s confidentiality or business strategies.

For a dismissal on the grounds of a conflict of interest to be deemed fair, it must be clearly established that the employee’s actions or relationships pose a real or potential threat to the organisation’s interests. Employers need to demonstrate that the conflict is substantial and cannot be resolved through less drastic measures, such as reassignment to a different role or department, implementation of stricter confidentiality agreements, or requiring the employee to divest conflicting interests.

The process leading to dismissal must include a thorough investigation into the alleged conflict, providing the employee with an opportunity to explain their side of the story. Employers should consider any mitigating factors or possible misunderstandings regarding the employee’s activities. It is crucial that the decision to dismiss is based on solid evidence of a conflict and that the employer has made a genuine effort to find alternative solutions.

2.5 Third party pressure

This scenario often arises in contexts where business relationships are at stake, such as a key client or contractor insisting on the removal of an employee it finds objectionable, for reasons that may include performance issues, breaches of trust or interpersonal conflicts.

Employers must first substantiate the significance of the third party’s demands in relation to the business. However, the employer also has a duty to balance this with the rights and interests of the employee concerned, ensuring that any decision to dismiss is not taken lightly or without exploring all possible alternatives.

The process should involve a thorough investigation into the third party’s complaints, including any specific incidents or behaviours that have led to the demand for dismissal. The employee should be given a fair opportunity to respond to these allegations and, where possible, the employer should attempt to mediate or find a solution that satisfies both the third party and protects the employee’s employment. Only when all other avenues have been exhausted, and it is clear that maintaining the employee's position is untenable, should dismissal be considered.

2.6 Protection from competition

The protection of an organisation’s competitive position can be a legitimate ground for dismissal, particularly when an employee’s actions or planned actions threaten the organisation’s proprietary information, customer relationships or market position. Such situations often involve employees who are in a position to start their own competing business, join a competitor, or otherwise use the organisation’s confidential information or trade secrets to the employer’s detriment.

Employers must demonstrate that the employee poses a real and imminent risk to the organisation’s competitive interests. This involves proving that the employee has access to sensitive information that could significantly harm the organisation if misused and that there are reasonable grounds to believe the employee intends to use this information in a competitive context.

The process of dismissing an employee for reasons related to competition must be handled with care to ensure fairness and legality. This includes providing the employee with a clear explanation of the concerns and any evidence supporting the decision, offering the employee an opportunity to respond to the allegations, and considering any measures short of dismissal that could mitigate the risk, such as tighter non-compete agreements or adjustments to the employee’s access to sensitive information.

2.7 Conclusion of fixed-term contracts

The conclusion of a fixed-term employment contract can constitute a fair reason for dismissal for SOSR, particularly when the contract’s end is not due to redundancy or the completion of a specific project. Fixed-term contracts are often used to fulfil specific business needs within a set period, such as covering maternity leave, completing a particular project, or when funding is available only for a limited time.

Employers must ensure that the fixed-term employment contract clearly specifies the duration of the contract and the conditions under which it may be ended. Employers should also communicate effectively with the employee about the contract’s status as it approaches its conclusion, including any possibilities for renewal or conversion to a permanent position, based on the needs of the business and the employee’s performance.

2.8 Imprisonment

Imprisonment of an employee can constitute a fair reason for dismissal, particularly when it affects the employee’s ability to fulfil their contractual obligations. The key consideration in such cases is whether the employee’s absence due to imprisonment has a substantial impact on the business operations, making their continued employment untenable.

For a dismissal to be fair on the grounds of imprisonment, employers must assess the nature of the employee’s role, the expected duration of the absence, and the feasibility of keeping the position open or finding a temporary replacement. In cases where the employee occupies a critical position, or their absence significantly disrupts operations, the employer may have a stronger justification for dismissal. However, the decision should not be automatic; employers are expected to consider the specific circumstances of each case, including the nature of the offence, the length of the sentence, and any potential reputational impact on the organisation.

Section 3 – Key considerations when carrying out SOSR dismissals

3.1 The risk of an unfair dismissal claim

Given the nature of SOSR, where the reasons for dismissal might be less clear-cut than with other categories of dismissal such as misconduct or redundancy, there is an inherent risk of disputes over the fairness of such dismissals.

To mitigate the risk of unfair dismissal claims, employers must ensure that the reason for dismissal genuinely falls within the SOSR category and is substantial enough to justify termination. Additionally, employers must follow a fair and transparent process, which includes conducting a thorough investigation, providing the employee with an opportunity to respond to the allegations or circumstances leading to the dismissal, and considering any mitigating factors or alternative solutions to dismissal.

3.2 The importance of documentation

Documentation plays a key role in defending unfair dismissal claims. Employers should keep detailed records of all steps taken in the dismissal process, including notes from meetings, communications with the employee, and documentation of the decision-making process. This evidence can be crucial in demonstrating that the employer acted reasonably, followed fair procedures, and had a substantial reason for the dismissal.

For dismissals under SOSR, where the reasons for dismissal can be varied and less defined compared to categories like misconduct or redundancy, having detailed records is crucial. These documents should cover the entire dismissal process, from the initial identification of the substantial reason leading to dismissal, through to the consultation process with the employee, any discussions or attempts at resolution, and the final decision to dismiss. This documentation should also include any relevant correspondence, meeting notes, and records of decisions made at each step.

Documenting the rationale behind the decision to dismiss is particularly important. Employers should clearly articulate why the situation falls under SOSR, how it impacts the employment relationship, and why dismissal is considered the appropriate response. This level of detail is necessary to demonstrate that the employer acted reasonably, considering all relevant factors and exploring alternative solutions before deciding to terminate employment.

3.3 Procedural fairness

Ensuring procedural fairness involves adhering to a set of principles and steps that safeguard the rights of the employee throughout the dismissal process. This approach not only helps in minimising the risk of unfair dismissal claims but also upholds the integrity of the employer and maintains workplace morale. Key steps in the procedure are set out below.

3.3.1 Explain the reason for the potential dismissal

The essence of procedural fairness lies in providing the employee with a clear and transparent explanation of the reasons for their potential dismissal and offering them a genuine opportunity to respond. This includes informing the employee of the issues or concerns regarding their employment, presenting evidence or examples that support the decision to consider dismissal, and allowing the employee to present their side of the story, including any mitigating circumstances or explanations.

3.3.2 Carry out an investigation

A fair procedure also entails conducting a thorough and unbiased investigation into any matters that lead to the consideration of dismissal. Employers must ensure that the investigation is carried out by individuals who are not directly involved in the issues, to prevent any conflict of interest and to maintain objectivity.

3.3.3 Consider any relevant policies, procedures and legal requirements

Employers must ensure that the dismissal process is consistent with any internal policies and procedures. This consistency helps to prevent claims of unfair treatment or discrimination. It is also important that the process is aligned with the principles laid out in employment legislation, including any requirements for consultations, notice periods, and the provision of a written statement detailing the reasons for dismissal.

An employer proposing to dismiss 20 or more employees within a period of 90 days or less is required to follow the collective consultation rules set out in section 188, Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). The duty to carry out collective consultation might be triggered by business reorganisations or dismissals due to a refusal to accept new terms and conditions. For further information about collective consultation rules, see Quick view: Collective redundancy consultation.

3.3.4 Consider alternatives to dismissal

Another critical aspect of procedural fairness is the consideration of alternatives to dismissal. Before deciding on dismissal as the appropriate course of action, employers should explore all possible options, such as reassignment, retraining, mediation, or even temporary suspension, if applicable. This demonstrates the employer’s commitment to finding a mutually beneficial solution and can significantly impact the fairness of the process.

3.3.5 Select an appropriate decision maker and offer a right of appeal

The decision to dismiss should always be made by someone with the appropriate level of authority who has considered all the information and evidence presented during the process. The employee should be notified of the decision in a timely and respectful manner, with an explanation of the reasons behind the dismissal and information on their rights to appeal the decision.

3.4 Varied procedures for SOSR

While the information at section 3.3 above sets out key steps that will be common to all SOSR dismissal procedures, the exact procedure for dismissing an employee on the grounds of SOSR can significantly vary depending on the specific nature of the SOSR invoked. Given the broad and diverse range of circumstances that can constitute SOSR, it is crucial for employers to tailor their procedural approach to the specific context of each case, ensuring that the process is fair, transparent and legally compliant. For example:

For situations involving business reorganisation or changes in job roles, the procedure might include detailed consultations with the affected employees, exploring alternative employment options within the organisation, and offering retraining where necessary. This approach not only helps mitigate the impact of such changes on employees, but also demonstrates the employer’s commitment to finding a resolution that minimises the need for dismissals.
In cases of refusal to accept changes to terms and conditions (often termed ‘fire and rehire’), the procedure should focus on extensive negotiations with employees or their representatives, in order for the employer to demonstrate that dismissal was a last resort.
When dealing with dismissals related to breakdown in relations or personality disputes, the procedure may involve mediation or other forms of conflict resolution before considering dismissal. This step is crucial in demonstrating that dismissal was a last resort after all reasonable efforts to salvage the working relationship were exhausted.
For conflicts of interest or situations where an employee’s actions threaten the organisation’s competitive interests, the procedure may require a thorough investigation, including gathering evidence of the conflict and allowing the employee to respond to the allegations. Employers must ensure that any decision to dismiss is based on clear, objective evidence and that the employee has had a fair opportunity to defend themselves.

3.5 Exploring alternatives to dismissal

As noted above, exploring alternatives to dismissal is a crucial step in the procedure for managing situations that might otherwise lead to a dismissal under the category of SOSR.

Before proceeding with dismissal, employers should thoroughly consider and, where feasible, implement alternative measures. These alternatives may include some of the steps set out below.

3.5.1 Retraining and upskilling

Offering employees the opportunity to develop new skills or enhance existing ones can be a mutually beneficial alternative to dismissal. This approach can be particularly effective in situations where the potential dismissal is due to the employee’s inability to perform their current role owing to changes in job requirements or technology.

3.5.2 Role modification

Adjusting the employee’s role or responsibilities can sometimes resolve issues that would otherwise lead to dismissal. This could involve altering work patterns, job duties, or other aspects of the role to accommodate both the employee’s capabilities and the organisation’s requirements.

3.5.3 Mediation and conflict resolution

In cases where the SOSR is related to interpersonal conflicts or breakdowns in working relationships, mediation can provide a neutral platform for all parties involved to express their concerns and work towards a resolution. This process can help repair working relationships and avoid the need for dismissal.

3.6 Assessment of reasonableness

When considering an unfair dismissal claim, an employment tribunal judge or panel must make as assessment of reasonableness, in accordance with section 98(4), ERA. This assessment involves an evaluation of whether the employer's decision to dismiss, and the process followed, were reasonable in all the circumstances. Employment tribunals take into account several factors in this evaluation, including the size and resources of the employer, and whether the employer acted consistently with how they have handled similar situations in the past. The following factors will be relevant:

First, the tribunal examines if the employer genuinely believed that there was a substantial reason for dismissal. This belief must be based on solid evidence and not on arbitrary or discriminatory grounds. The employer’s rationale for considering the situation as SOSR must be clear and supported by factual evidence.
Second, the tribunal considers whether the employer carried out as much investigation into the matter as was reasonable. This includes gathering all relevant information and evidence related to the alleged substantial reason for dismissal and ensuring that the investigation was conducted fairly and thoroughly.
Third, another critical aspect of the assessment is whether the employer followed a fair process in making the decision to dismiss. This means providing the employee with detailed information about the allegations or reasons for the potential dismissal, giving them an opportunity to respond, considering their response carefully, and exploring all possible alternatives to dismissal.
Finally, the tribunal assesses whether the decision to dismiss the employee was one that a reasonable employer might have made in the circumstances. This involves a balance between the employer’s right to manage their business and the employee’s right to security of employment. The tribunal looks at whether the decision was proportionate to the issue at hand and whether dismissal was truly the last resort.