Unfair dismissal

PLEASE NOTE: This page is intended to give general information about the law but is not intended as legal advice and you must not rely on it as such, nor is any liability accepted if you do rely on it. The law may change from time to time and we cannot include all elements of the law and its application in this summary. For further advice relating to your circumstances, please contact us.
 

Is there a dismissal?
 

Dismissals include:
 

  • An express notification that an employee is dismissed – in writing or verbally.

  • Constructive dismissal – resignation in response to the employer’s repudiatory breach of contract (we deal with this in a separate fact sheet ).

  • Non-renewal of a fixed-term contract.
     

Who can claim unfair dismissal?
 

An employee with more than two years of continuous service, has the right not to be unfairly dismissed. There are some other kinds of dismissal where two years’ continuous service is not required, for instance, where a dismissal is discriminatory, or because you have blown the whistle on wrongdoing, or where the dismissal is because you have tried to exercise certain statutory rights.  

The right applies to employees only – not contractors, freelancers or agency workers in most cases. An employment tribunal will look at the reality of the relationship between the parties, not just the label that they give to it.
 

What is unfair dismissal?
 

An employee’s dismissal is unfair if their employer does not have a good reason for their dismissal and/or does not act reasonably when relying on that reason, including following a fair procedure.
 

Is there a fair reason for dismissal?
 

There are five potentially fair reasons for dismissal:

  • Misconduct – disciplinary issues.

  • poor performance or ill health.

  • business closure, workplace closure and reduced need for employees.

  • If continuing to employ you would contravene the law - e.g. because of immigration status.

  • Some other substantial reason - a catch-all category e.g. for failing to agree changes in terms and conditions.
     

A dismissal for any other reason is unfair. Having identified the potentially fair reason for dismissal, there must then be a consideration of whether the employer has followed a fair procedure.
 

Is a fair procedure being followed?
 

An employer must follow a fair procedure before deciding to dismiss an employee.

In cases of misconduct and poor performance, the employer should comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures. The employer should also follow their own internal procedures.
 

Is the dismissal reasonable?

In determining whether the employer acted reasonably in all the circumstances (or “within the range of reasonable responses of a reasonable employer”), different factors will be taken into account depending on the reason for dismissal.  However, in all cases, dismissal will need to be a reasonable response in the circumstances.

In performance or health capability issues, employers will need to consider whether it is reasonable to give the employee a further period of time to improve.

In conduct issues, an employer will need to genuinely believe in the employee’s guilt on the basis of a reasonable investigation.

In redundancy situations, employers will need to consider alternatives to dismissal, including the availability of alternative employment.

There are many factors which may contribute to the fairness of a dismissal and the above is only a very broad summary.

Issuing a claim - deadlines and time limits

Before issuing a claim in the employment tribunal, generally an employee should submit an internal appeal. An unreasonable failure to do so, may reduce any compensation awarded by up to 25%. An unreasonable failure by an employer to consider an appeal may increase any compensation awarded to the employee by up to 25%.

The employee must also notify ACAS of the claim within three months of the dismissal using the ACAS early conciliation process.

Once the employee has an early conciliation certificate, they can submit a claim to the employment tribunal. Deadlines will vary for the submission of a claim but the employee will have at least a month from the end of the early conciliation process to submit their claim.

No fee is payable for starting early conciliation or for issuing a claim in the employment tribunal.
 

Remedies
 

If a dismissal is held to be unfair, an employment tribunal can order the employer to re-engage or reinstate the employee or, more likely in practice, to pay compensation.

Compensation usually consists of (i) a basic award - calculated using a formula which takes into account the employee’s age, length of service (subject to a maximum of 20 years) and a week’s pay (subject to a statutory cap which changes from year to year - £538  for dismissals from 6 April 2020); and (ii) a compensatory award based on the employee’s financial loss (including salary, pension and other benefits), which is also subject to a cap of the lower of 52 weeks’ gross salary pay or the overall statutory cap (£88,519 for dismissals from 6 April 2020).

An employment tribunal can make reductions to overall compensation if it considers that the employee either contributed to their dismissal, or that the employee could or might have been fairly dismissed if the employer had followed a fair procedure.