What is Unfair Dismissal?
Ordinary unfair dismissal is when your employment contract is terminated and your employer did not have fair reason to do so.
You are protected by law against being unfairly dismissed, provided you are an employee. Workers or self-employed people are not protected against unfair dismissal.
To bring a claim for unfair dismissal you must have been employed continuously for two years on the date you were dismissed. There are certain circumstances where you are entitled to bring a claim for automatic unfair dismissal and will not require the two years’ service (see automatic unfair dismissal below).
An employee is an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. A contract is an agreement that sets out the terms and conditions of the employment.
If you are employed on a zero hours’ contract, or work as a contractor, then in most circumstances you will be considered a worker and will not be able to bring a claim for unfair dismissal.
There are some situations where determining your employment status is not straightforward, so if you are unsure please contact us and we will be able to advise you further.
There are five potentially fair reasons for dismissal. These are conduct, capability, redundancy, statutory restriction (illegality) or some other substantial reason “SOSR”.
It is potentially fair to dismiss an employee for a reason that relates to the conduct of the employee. This may be a single act of gross misconduct or a series of acts of less serious misconduct. Misconduct may include disobeying reasonable management orders, breach of contract terms, and unauthorised absence from work or repeated poor attendance.
Gross misconduct is misconduct so serious as to justify summary dismissal (without notice) of an employee and is more likely to include serious negligence, theft, fraud, physical violence or serious breach of health and safety regulations.
A dismissal is potentially fair if it relates to the capability or qualifications of the employee for performing their job. This will be assessed by reference to an employee’s skill, aptitude, health or any other physical or mental quality. Capability dismissals may be because of poor performance, or because of an employee’s ill-health. In the case of ill health dismissals, if the illness amounts to a disability under the Equality Act 2010 then this may amount to unlawful disability discrimination. A capability dismissal may also relate to an employee’s qualifications, for example if, after recruitment it become apparent they do not have the necessary qualifications, or they are employed on the understanding they will obtain certain qualifications but fail to do so.
A dismissal on the grounds of redundancy is potentially fair where it is wholly or mainly attributable to the employer either making a business closure, workplace closure or reduced requirement for employees.
Statutory Restriction (Illegality)
Where an employee could not continue to work in the position which they held without either the employer or the employee breaching a duty or restriction imposed by law this will be a potentially fair reason to dismiss.
However, the employer must show that the employee’s continued employment would actually breach a statutory restriction. Dismissals under this heading would include where continued employment would breach immigration rules, where an employee has had their driving licence revoked and is required to drive to do their job, where an employee has failed to obtain vocational qualifications or because the employer discovers that the employee has a criminal record.
This is designed to catch other potentially fair dismissals that would not fall into any of the other categories, such as where there has been a breakdown in mutual trust and confidence between an employer and employee.
If an employer has a potentially fair reason to dismiss an employee, they must be able to show that they have acted reasonably in treating that reason as sufficient to justify dismissal. Courts and Tribunals have interpreted this as meaning that the dismissal must be procedurally fair and is often referred to as the “reasonableness test”.
An employer should follow (as a minimum) the ACAS guidelines, in that they should properly investigate the matter, gather all the available evidence, inform the employee of the allegations, hold a disciplinary hearing, allow the employee to be accompanied, allow the employee the opportunity to present their defence, inform the employee of the decision and give them the opportunity to appeal.
If the employer fails to follow any procedure, any subsequent dismissal may be procedurally unfair.
Legislation also protects employees from “automatically” unfair dismissal when the reason for their dismissal is one of those prescribed by the statutory provisions (known as the “inadmissible reasons” for dismissal). Some examples of inadmissible reasons are set out below:
- Connected with pregnancy, maternity leave, paternity leave, adoption leave, parental leave or shared parental leave (to include time off for antenatal or adoption appointments or time off for dependants);
- For a health and safety reason;
- For a reason connected with rights under the Working Time Regulations;
- For performing functions as an employee representative in a collective redundancy or TUPE transfer;
- For making a protected disclosure (for more information on this reason see our whistleblowing FAQs;
- For asserting a statutory right;
- For trade union membership or non-membership, or participation in trade union activities;
- Related to status as a part time worker or fixed term employee;
- Or following selection for redundancy on any of the grounds listed above.
This list is not exhaustive so if you believe you may have been dismissed for an automatically unfair reason please contact us for further advice.
Where an employee alleges that they have been dismissed for an inadmissible reason, they will not need the qualifying two-year service to bring a claim for automatically unfair dismissal, unless they are alleging that they have been dismissed because of a spent conviction, a TUPE transfer or by reason of retirement.
Automatically unfair dismissal claims differ from ordinary unfair dismissals as the “reasonableness test” has no relevance, a dismissal for an inadmissible reason is always deemed to be unfair. If it is established that the reason or main reason for dismissal is inadmissible then no further enquiry is necessary. A minimum basic award is payable in some kinds of automatically unfair dismissal cases, and the upper limit on the compensatory award does not apply in some cases. In cases concerning dismissal for whistleblowing or trade union reasons, the employee may apply for “interim relief” to protect their income pending a full hearing, effectively continuing their salary until the hearing.
If you’re threatened with dismissal (or are dismissed) you should seek advice as soon as possible. It is advisable to keep a copy of any correspondence relating to your dismissal or any procedure leading up to it as any adviser would need to review this to assess and advise you on the merits of your potential claim. You can also speak to your union representative if you’re a member of a trade union.
If the tribunal finds that an employee was unfairly dismissed, it will then decide what remedy to award. In considering remedies, the tribunal will consider:
The Tribunal can order that the employer must reinstate the employee. This effectively means that the employee was never dismissed. This involves re-employing them on the same terms and conditions without any loss of pay, continuity of employment or pension rights. The employee should also receive the benefit of any pay rise they would have received had they not been dismissed.
The Tribunal can order that the claimant must be engaged by the employer, its successor, or an associated employer in employment that is comparable to the job from which the employee was dismissed, or in other suitable employment.
The most frequently awarded remedy is financial compensation. This will usually consist of a basic award and a compensatory award.
Reinstatement and re-engagement will only be considered if the employee has requested it. If either is requested, then the Tribunal will consider whether the employee contributed to their dismissal.
Two things that the Tribunal does not have the power to award to a successful Claimant (which are commonly requested by our clients) are an apology or an agreed reference. It may be possible to achieve either of these as part of a settlement pre-Tribunal but the Tribunal themselves have no statutory powers to order the company to provide either of these.
A basic award is calculated the same way as a statutory redundancy payment which takes account of the employees age at the date of dismissal, their length of service (capped at 20 years) and the amount of a week’s pay (currently capped at £489. If the employee’s conduct prior to dismissal makes it just and equitable to do so then Tribunals have discretion to reduce the basic award.
The Tribunal can order an amount as a compensatory award that they believe is just and equitable. This is based on the employee’s financial loss and will include salary, pension and other benefits lost either until they obtain new employment (at an equivalent rate) or for such period they deem just and equitable. Any employee who is dismissed has a duty to take reasonable steps to mitigate their loss and provide evidence of the steps they have taken to secure new employment.
Any compensatory aware can be reduced if the Tribunal believes the employee has failed to mitigate their loss, the employees conduct has contributed to their dismissal or that the employee would have been fairly dismissed if the proper procedure was followed (this last point is often referred to as a Polkey reduction).
To make a claim for unfair dismissal, you must lodge an ET1 with the Employment Tribunal.
At the tribunal, an employee must prove that they are eligible to claim and that they have been dismissed. It is for the employer to prove the reason for the dismissal and for the tribunal to decide whether the employer acted reasonably or unreasonably in dismissing the employee.
A claim for unfair dismissal must be lodged with the Employment Tribunal 3 months (less one day) from the date of dismissal. However, if you want to make a claim to an employment tribunal, you must notify Acas of your potential claim first. Please see separate FAQ’S on early conciliation.
If an employee’s employment has been terminated with notice, the date of dismissal is the date that the notice expires. If it is terminated without notice, the date of termination is the date it takes effect. When working under a fixed-term or specific task contract then the date of dismissal is the date the contract expires.