Unfair Dismissal Unfair Dismissal

Whether you are an employee or an employer, addressing difficulties at work is stressful and often confusing.

What is Unfair Dismissal?

Unfair dismissal happens when an employee with the right to claim is dismissed and the employer does not have a fair reason or does not act reasonably in treating that reason as sufficient to dismiss. The focus is on the fairness of both the reason and the process.

If an employer fundamentally breaches the employment contract, an employee may resign and treat themself as dismissed. If eligible, they may claim unfair dismissal. This is known as constructive dismissal.

Who can claim?

Eligible claimants are generally employees (not workers or the self‑employed) who have been dismissed.

Qualifying service: most employees need at least two years’ continuous service to claim ordinary unfair dismissal (although this is due to change in 2027).

In some cases, the qualifying period is shorter or does not apply. For example, if an employee is claiming for an automatically unfair reason, including dismissal linked to pregnancy, childbirth or maternity, family leave, whistleblowing, asserting certain statutory rights, health and safety activities, and certain discrimination‑related reasons.

Certain categories (for example, police officers, the genuinely self‑employed, and some shareholding directors without an employment contract) cannot claim unfair dismissal.

Potentially Fair Reasons and the Reasonableness Test

An employer must show a potentially fair reason for dismissal. These are:

• Conduct (for example, misconduct or gross misconduct)
• Capability or qualifications (including performance or ill health)
• Redundancy
• Statutory illegality/restriction (for example, loss of right to work)
• Some other substantial reason (SOSR) that justifies dismissal (for example, a breakdown of trust and confidence or the end of a client contract necessitating changes)

Reasonableness test: the Tribunal asks whether the employer acted reasonably in all the circumstances, including adopting a fair procedure, carrying out sufficient investigation, and reaching a decision within the range of reasonable responses open to a reasonable employer. The Tribunal does not substitute its own view for that of the employer.

Procedural Fairness: Core Expectations

• Tell the employee the concern or allegation and the possible consequences.
• Carry out a reasonable investigation before deciding
• Provide relevant evidence in advance of any meeting
• Hold a meeting to hear the employee’s response; allow a companion (trade union representative or colleague)
• Consider alternatives to dismissal (for example, warnings, redeployment or training)
• Communicate the decision in writing with reasons
• Offer a right of appeal and conduct an impartial appeal

For performance or ill health, set clear standards, give support and time to improve, and consider medical evidence and adjustments where appropriate.

For redundancy, consult meaningfully, use fair selection criteria, and consider suitable alternative roles.

Time Limits

A claim for unfair dismissal must usually be presented to an Employment Tribunal within three months less one day of the effective date of termination. Time limits are paused while the parties engage in ACAS Early Conciliation. You must notify ACAS before issuing a claim so that Early Conciliation can take place.

Keep careful note of dates; time limits are strictly applied.

Remedies and Compensation

If unfair dismissal is proved, the Tribunal may order: -

• Reinstatement (return to the old job on the same terms)
• Re‑engagement (a comparable job with the same employer or associated employer)
• Compensation (most common), which has two parts:
• Basic award: broadly linked to age, length of service and weekly pay (subject to a statutory cap)
• Compensatory award: for actual financial loss (for example, lost earnings and benefits), subject to a statutory cap in most cases

Key factors affecting compensation include:

• An employee’s duty to mitigate loss by seeking other work
• Any contributory fault by the employee, which can reduce awards
• Polkey reduction if a fair procedure would still have led to dismissal
• Adjustments for failure to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures, which can increase or decrease awards
• Interim earnings and benefits, notice pay already received, and any ex‑gratia sums

Certain automatically unfair dismissals and dismissals for whistleblowing or discrimination are not subject to the usual compensatory cap.

Practical Do’s and Don’ts

For employers:

• Do identify and record the principal reason for dismissal and follow a fair, consistent procedure
• Do investigate proportionately, disclose evidence, and allow representation and an appeal
• Do consider reasonable alternatives to dismissal and keep detailed notes
• Don’t predetermine the outcome or rush the process
• Don’t dismiss for a reason that may be automatically unfair or discriminatory
• Don’t overlook reasonable adjustments for disability or support for performance improvement

For employees:

• Do ask for allegations and evidence in advance, attend meetings, and put forward your explanation and mitigation
• Do use your right to be accompanied and to appeal decisions
• Do keep records of events, performance objectives, and your job search after dismissal
• Don’t ignore warnings or meetings; engage constructively
• Don’t delay contacting ACAS for Early Conciliation if you plan to claim