Employers cannot dismiss an employee who is protected from unfair dismissal unless they have a potentially fair reason for the dismissal and they make a decision which is fair in all the circumstances.
Employees with two years’ service generally have the right to make a claim for unfair dismissal.
There are some reasons for dismissal that are automatically unfair, and where the two-year qualifying period does not apply. Examples include dismissal for:
- Trade union related reasons
- Asserting a statutory right
- Health and safety related reason
- Maternity related reason
- Taking time off for dependants or paternity or parental leave
- Asserting a right to apply for flexible working
If the employee establishes they were dismissed for an automatically unfair reason, the employer cannot then establish to a tribunal that the dismissal was fair.
Seek professional legal advice if you are concerned whether your circumstances qualify for unfair dismissal.
What constitutes unfair dismissal?
A dismissal will be deemed unfair unless the employee was dismissed for a fair reason and the employer acted reasonably in all the circumstances.
Grounds for making a claim for unfair dismissal
An employee could decide to bring an unfair dismissal claim because they believe that:
- The reason given by their employer for the dismissal wasn’t the real one
- The employer dismissed them for an unfair reason
- The employer acted unreasonably
If an employee wishes to raise a claim for unfair dismissal then they must first attempt ACAS early conciliation within three months of their employment terminating. If early conciliation is unsuccessful or either party does not wish to progress it then an Early Conciliation certificate will be issued. The Claimant can then proceed to make a claim to the tribunal. The time limit for making a claim will be extended to take account of the early conciliation process. The requirement for early conciliation applies for the majority of claims that can be made to a Tribunal.
It is also possible for an employee to raise a claim for constructive unfair dismissal. This occurs where the employer has materially breached the employee’s contract of employment in such a way that the employee is entitled to resign and treat themselves as having been dismissed.
Grounds for fair dismissal
The employer may seek to prove that the reason(s) for the dismissal were fair, by establishing any of the following potentially fair reasons:
- Related to the capability or qualifications of the employee;
- Related to the conduct of the employee;
- Where continued employment would involve the employee or the employer contravening a duty or restriction imposed by law;
- Some other substantial reason.
The essence of unfair dismissal is that the employer must prove that:
- The principle reason for the dismissal was potentially fair;
- They genuinely believed that they had a good and fair reason for dismissal;
- They reasonably followed a fair procedure;
- That their decision to dismiss was a reasonable response in all the circumstances.
Factors which affect the reasonableness of an employers’ action include:
- The length of time during which the employee has been employed by them;
- The satisfactoriness or otherwise of the employee’s service;
- The difficulties which may face the employee in obtaining other employment;
- Treatment of other employees in similar circumstances;
- The investigation carried out;
- The hearing in a disciplinary matter;
The employer’s decision must then must satisfy a test of fairness. If the employer has not followed a fair procedure, the decision to dismiss will be unfair even if there is otherwise a good reason for the dismissal and the employer’s error is purely procedural.
It is then for the Tribunal to address the issue of whether the employer was reasonable to respond to the situation by dismissing the employee.
In order to terminate employment fairly the dismissal must be for one of the following grounds:
- Capability (including competence to do the job and ill-health).
- Contravention of a statutory enactment.
- Some other substantial reason.
In order to dismiss an employee fairly a fair procedure is essential. Employers are advised to seek guidance prior to proceeding in order to minimise the risk of a claim being made or, if a claim is made, to be in a stronger position to defend it.
With regard to capability issues, generally speaking, a series of warnings should be issued (with a process at each stage which is compliant with the ACAS code – see below – being followed) over a period of time advising the employee of the particular shortfalls in their performance and any improvements required.
- Similarly, with regard to conduct which does not amount to gross misconduct, again, a series of warnings should be issued. The process at each stage should be compliant with the ACAS code.
- If the conduct is sufficiently serious then an employee could be dismissed for gross misconduct without any previous informal or formal warnings.
However, in such circumstances, it is still essential that a proper procedure (compliant with the ACAS Code) is followed which will often involve suspending the employee at the outset whilst a full investigation is carried out. Once the employee has been suspended they would then be invited to a disciplinary hearing but, employers are advised to seek advice should such a situation ever arise.
Remedies for unfair dismissals
In theory, if an employee has been found to have been unfairly dismissed, the employer may be ordered to reinstate or re-engage the employee. In practice however this is rarely the case.
A successful claim for unfair dismissal will generally see the claimant awarded compensation. Compensation will comprise:
- a basic award – related to statutory redundancy payments, depending on the employee’s age, gross weekly pay and length of service; and
- a compensatory award – reflecting the employee’s financial losses e.g. loss of salary, pension, and other benefits, capped at an index-linked maximum, but usually not exceeding the employee’s annual salary.
There are some exceptions to the limit to the compensatory award, including whistleblowing, and health and safety cases. In addition, there is no limit on the amount that can be awarded where the dismissal is related to unlawful discrimination (i.e. discrimination on the grounds of sex, race, disability, age, marriage and civil partnership, sexual orientation, gender reassignment, pregnancy and maternity and religion or belief).
Note that compensation for unfair dismissal is limited to financial losses only and, unlike in discrimination cases, no award can be made to compensate for injured feelings or distress caused by the manner of dismissal.
The employee is also under a duty to mitigate any loss by actively looking for new employment, which they will must evidence to the tribunal to avoid any discretionary reduction in compensation.
The exception is where dismissed employees – particularly those with long service – often have no references from the employer who dismissed them and as such can justify a failure to secure employment.