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Unfair Dismissal

January 19th, 2010

Introduction to unfair dismissal

Claims for Unfair Dismissal are brought in the Employment Tribunal.

If an Employment Tribunal decides an employer has acted unfairly it will normally make a finding of unfair dismissal and an order for compensation and has the power to order the employee to be reinstated.

If an employee resigns in circumstances where they are justified in doing so because of the employer’s conduct, this is know as “constructive dismissal.” Most constructive dismissals are also unfair dismissals.

Who is protected against unfair dismissal?

The protection against being unfairly dismissed only covers employees, it does not apply to people who work on a self employed basis even though they might be classed as “workers” and have certain rights under the Employment rights Act 1996.

Employees also must have 2 years continuous employment before they are protected from being unfairly dismissed. When calculating the period of employment, the minimum period of notice of 1 week is added, so anyone who is dismissed with immediate effect, actually qualifies after 1 year and 51 weeks!

Unfair Dismissal: Potenitally fair reasons for dismissal

If an employer wishes to avoid a finding of unfair dismissal, it must first of all have a potentially fair reason to dismiss. The law states that the following are potentially fair reasons:

1. misconduct;
2. redundancy;
3. capability (this includes either sickness absence or ability to do the job);
4. qualifications;
5. if the continued employment of the employee would be unlawful.

There is also a residual category called “Some other substantial reason” which can apply to a limited number of situations which do not fit into these categories. This includes retirement where the employer has an objectively justified contractual retirement age.


Retirement is no longer a potentially fair reason for dismissal. In some limited circumstances an employer who has a contractual retirement age may be able to justify requiring am employee to retire at that age.


Unfair Dismissal: acting reasonably

It is unusual for findings of unfair dismissal to be based on the employer failing to rely on a potentially fair reason for dismissal. However, an employer must also ensure that they acted reasonbly in relying on the fair reason to dismiss. Otherwise, despite having a fair reason for dismissal the result will be an unfair dismissal.

Most findings of unfair dismissal arise from the employer going wrong in the way they go about the dismissal. There are different steps expected of an employer depending on the reason chosen, and it is the failure to follow the correct steps which normally renders a dismissal unfair

Click the link below to see what is expected in the most common categories relied on when defending claims of unfair dismissal:

Misconduct Redundancy Capability(sickness) Capability (Other)

ACAS Code of Practice

In the case of Misconduct or Capability an employer is expected to follow the ACAS code of Practice

Remedies for unfair dismissal

If an employee succeeds in winning a claim of unfair dismissal they are entitled to a basic award (similar to a redundancy payment) if they have not already received a redundancy payment. See ready reckoner, although note that an employee with only one year’s continuous employment is entitled to a basic award if they win a claim of unfair dismissal, even though if they had been made redundant they would not have qualified for a redundancy payment.

An employee who has been unfairly dismissed by reason of redundancy will not get a basic award if they have already been paid the correct redundancy payment.

They are also entitled to compensation in respect of their financial losses which usually comprises their loss of earnings, but can include other losses and expenses.

Employment Tribunals will normally make a nominal award for “loss of statutory rights.” This is based on the loss of right to claim unfair dismissal and loss of right to a redundancy payment in the first 2 years of their next job.

Reinstatement of an unfairly dismissed employee

An Employment Tribunal  can also order reinstatement of an unfairly dismissed employee but this is discretionary and even if an employee asks for reinstatement will not necessarily be ordered, even though the Employment Tribunal has found that the employee was unfairly dismissed. If an employee is not reinstated and is still suffering ongoing loss of earnings, an award for future losses can be made.

Maximum and average awards for unfair dismissal

The most an Employment Tribunal has the power to award for an employee’s losses for unfair dismissal is 1 year’s salary subject to a maximum of  £76,574. In practice most unfair dismissal awards are considerably lower.  In 2012 – 2013 the median average award in unfair dismissal claims was £4,832.

Possible reasons for reducing an unfair dismissal compensation award

A compensatory award in an unfair dismissal case may be less than the employee’s actual losses for any of the following reasons:-

  • If the employee has not made sufficient effort to find new employment following their unfair dismissal
  • If the employee had not been unfairly dismissed, their employment would have come to an end at a date earlier than the hearing date anyway even if the employer had acted fairly
  • In an unfair dismissal for  misconduct case the employee has been partly or wholly to blame for their own dismissal (The employer can be found to have unfairly dismissed an employee even when the employee is to blame!)
  • If the employee has already been given a severance payment in excess of their entitlement, any extra can be deducted from the unfair dismissal award.

How to bring a claim of Unfair Dismissal

Claims of unfair dismissal are brought in the Employment Tribunal.

There are strict time limits on bringing a claim. The claim must be received by the Employment Tribunal within 3 months of the date of dismissal even where the employee has appealed against the dismissal. The employee does not have to wait for the appeal to be concluded before bringing a claim. The time for bringing a claim can be extended as long as the employee has registered for pre claim conciliation with ACAS, using the compulsory ACAS conciliation procedure. The Employee will not miss the deadline as long as they have registered with the ACAS conciliation procedure within 3 months of the date of dismissal, but there are still strict time limits for the employee to submit the case to the Employment Tribunal once that period of conciliation has come to an end.

An application to an Employment Tribunal must be accompanied by the Employment Tribunal fee or a valid and fully evidenced application for a fee remission, If any of these are missing, or if the application form has not been correctly completed or if documents or information is missing the application will not be accepted and it will be returned to the employee.

Links relating to Unfair Dismissal

ACAS guidance


Please note that the information on this page is intended to be a guideline and is therefore a summary of the law only and not a complete guide. Before taking any action based on this information you are strongly advised to take legal advice. Whilst every effort has been made to ensure that the information contained on this page is up to date and accurate, no guarantee can be given to this effect.

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