UNFAIR DISMISSAL

A guide to unfair dismissal from the employment law experts

Marjon Law, specialist employment lawyers is owner-led by Marc Jones, who is ranked and recommended in legal publications as a leading employment law solicitor, with over 20 years of experience practising solely in employment law.

If you would like urgent advice on unfair dismissal, please contact us as soon as possible.

What is the legal test for unfair dismissal?

An employer cannot simply dismiss an employee just because it feels like it. There must be a genuine reason.

Under section 98 of the Employment Rights Act 1996 (ERA), there are 5 potentially fair reasons for dismissal, which are:

conduct
capability (eg skill or health) or qualifications (eg technical or professional)
redundancy
that an employee could not continue to work in the position which s/he held without contravention (either on his/her part or on that of the employer) of a duty or restriction imposed by or under an enactment
some other substantial reason (SOSR) of a kind such as to justify the dismissal of an employee holding the position which the employee held.

In deciding whether the dismissal was fair or unfair (having regard to the reason shown by the employer) an employment tribunal will consider:

whether an employer acted reasonably or unreasonably having regard to the size and administrative resources of the employer and
equity and the substantial merits of the case.

The legal test is whether an employer has acted within a band or range of reasonable responses. That range may include an employer who is quite lenient but also an employer who takes a harsh view on the same facts.

An employer has the burden of proving the dismissal was fair.

In short, challenging an employer’s decision to dismiss on the basis that objectively no reasonable employer would have dismissed, is difficult.

However, there is a second aspect to fair dismissals, which may assist employees. An employer must also have acted in a procedurally fair way. If an employer fails to do so, an employee may succeed with an unfair dismissal claim, even if the dismissal may have been otherwise fair.

Misconduct dismissals

In misconduct dismissals, the case of British Home Stores Ltd v Burchell sets out the test by which employment tribunals decide whether employers have acted reasonably.

In terms of misconduct, the Burchell case can be reduced down to a 3-step test:

Did the employer genuinely believe the employee was guilty of the alleged misconduct?
Did the employer have genuine grounds to suspect that the employee was guilty of misconduct?
Did the employer carry out a reasonable investigation before making a final decision about the employee’s guilt?

It does not matter whether an employee was in fact guilty of misconduct but whether it was reasonable of the employer to decide that they were guilty and then dismiss them. In other words, did the employer come to a reasonable decision after a reasonable investigation?

Examples of what might make a decision to dismiss appear unreasonable include:

not conducting an investigation or conducting an inadequate investigation
not giving sufficient weight to the evidence that points towards an employee’s innocence
not taking an employee’s previous long-standing good conduct and integrity into consideration when considering the truth of any statement made by them
choosing to dismiss an employee for gross misconduct for a trivial conduct matter.

Dismissals for SOSR

Employment tribunals have found a dismissal to be fair for SOSR, in the situations as follows:

business reorganisation (that does not fall within the statutory definition of redundancy)
refusal to accept a change in terms and conditions of employment
conflict of interest with an employer’s legitimate business interests
personality clashes or irreconcilable difference between employees (where an employer has taken steps to resolve the problem)
pressure from third parties (eg from a customer, client or supplier)
reputational risk
employed couples (under a joint employment contract)
a breakdown in trust and confidence
expiry of a fixed term contract (provided this is the real reason).

Can a dismissal for a potentially fair reason still be unfair if the correct procedure has not been followed?

Dismissals occur for many reasons, which can include work performance issues or long-term sickness absence, conduct (eg failing to follow a reasonable management instruction), breaching company rules and theft (to name but a few) but it also includes redundancy.

When it comes to redundancy, many employers, however well-intentioned, make errors in the consultation and/or in the selection process.

Claims for redundancy-based unfair dismissal are just as legitimate as for any other reason for dismissal. Please see the web page redundancy.

Are there limitations on bringing a claim for unfair dismissal?

An employee must have at least 2 years continuous service with an employer in order to be able to bring an employment tribunal claim for unfair dismissal.

A worker who is employed under a contract for services cannot bring a claim for unfair dismissal.

Are there any exceptions to the 2-year rule for claiming unfair dismissal?

Yes, if the dismissal is automatically unfair. In such cases, there is no minimum qualifying period of service to bring a claim.

A dismissal will be automatically unfair if the reason (or principal reason) as follows:

for a health and safety reason
for reasons connected with pregnancy, childbirth, statutory maternity leave, statutory paternity leave, statutory adoption leave, parental leave, shared parental leave, time off for attending antenatal and adoption appointments or time off for dependants
for a shop or betting worker for refusing to work on a Sunday
for a reason connected with rights under the Working Time Regulations 1998
for performing functions as an occupational pensions trustee
for performing functions as an employee representative on a TUPE transfer or collective redundancy
for making a protected disclosure (ie whistleblowing)
for asserting a statutory right
in connection with an application for flexible working
relating to the national minimum wage
for enforcing rights in relation to working tax credit
in connection with a prohibited list under the Employment Relations Act 1999
in connection with time off for study and training request rights
in connection with carrying out jury service
in connection with carrying out the functions of or exercising the rights of an employee representative under the Information and Consultation of Employees Regulations 2004
in connection with European works council activities
relating to status as a part-time worker
relating to status as a fixed-term employee
in connection with trade union recognition
for trade union membership or non-membership, or participation in trade union activities
in connection with exercising the right to be accompanied to a disciplinary or grievance hearing
for taking part in protected industrial action
In connection with exercising prescribed rights as an agency worker
in connection with pensions auto-enrolment
following selection for redundancy on any of the grounds listed above.

In the following cases, there will still be an automatic unfair dismissal, but an employee will need the qualifying period of service (ie 23 months and 3 weeks) in which to make a claim:

dismissal because of a spent conviction
dismissal where the sole or principal reason for the dismissal is a TUPE transfer itself unless it is an economic, technical or organisational reason (ETO) reason entailing changes in the workforce
dismissal by reason of retirement.

What compensation can an employment tribunal award for unfair dismissal?

If an employee is successful at a final hearing, an employment tribunal can make financial awards (dependent on the complaint) as follows:

a basic award (section 119 of the ERA)
a compensatory award: loss of wages after dismissal, including pension contributions and/or unpaid wages and/or failure to pay notice money (section 123 of the ERA).

A basic award (based on the employee’s age, length of service and a statutory week's pay on the date of dismissal) has a statutory maximum amount (and changes annually): see web page compensation, rates and tables.

A compensatory award, which is the lower of 12 months’ pay or the statutory maximum (and changes annually) is based on the employee’s losses after the deduction of income tax and National Insurance contributions to the date of the hearing and future losses (based on the length of time the employment tribunal decides it would take for the employee to be in the same financial position that they were in before the dismissal: see web page compensation, rates and tables

In a successful claim of unfair dismissal, in addition to compensation, the employee can request that the employment tribunal order reinstatement or re-engagement (ie the same job or similar job with the employer). If the employer fails to comply with such an order, an employment tribunal may make an additional award of between 26 and 52 weeks’ pay.

The employment tribunal will expect the employee to have mitigated their loss. This means reducing the employee’s financial loss (ie the steps taken to find alternative employment). This does not necessarily mean the same type of employment. At first, it may be reasonable for the employee to look for jobs on a similar salary and in a similar area to their old job. However, as time goes by, the ex-employee will be expected to consider work, which may be less well paid, part-time or in a different area to the previous job.

The employee must show that they have mitigated their loss and will be expected to provide the employment tribunal with evidence that they have claimed state benefits and kept all paperwork in support of finding new work (eg online adverts, copies of any applications made for jobs and rejections).

Can an employment tribunal reduce compensation?

An employment tribunal can reduce the compensatory award if:

the employee receives a statutory redundancy payment or enhanced redundancy payment
it considers the employee failed to mitigate their loss
it considers that the employee contributed towards the dismissal by their conduct, which can be up to 100%
it finds the dismissal to procedurally unfair but concludes that if the employer had followed a fair procedure the ex-employee would have been dismissed in any event
the employee failed to appeal the dismissal, which can be up to 25%

Can an employment tribunal increase compensation?

An employment tribunal can increase the compensatory award by up to 25%, if the Respondent has failed to follow the Acas Code of Practice on disciplinary and grievance procedures (eg failing to hold a disciplinary meeting and/or an appeal meeting).

The material contained in this web page is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

Why choose Marjon Law for unfair dismissal advice?

We have been involved directly and indirectly with hundreds of employment tribunal claims for clients for over 20 years, many of which involved unfair dismissal.

As specialist employment lawyers, our clients' interests are paramount to us.

We ensure that all our clients receive the best advice possible.

We will advise on the process after the dismissal and any subsequent employment tribunal claim.