Unfair Dismissal – common questions
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.
Constructive dismissal is a form of unfair dismissal, whereby an employee resigns as a direct result of the company fundamentally breaching their contract. In order to show it was a direct result of the fundamental breach case-law dictates the employee should resign within 24 hours to a week (although case law also dictates each case should be looked at on its own merits with regard to the delay in resigning), and clearly state that the breach is the reason for their resignation.
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.
What is the qualifying period to claim unfair dismissal?
In order to bring a claim for unfair dismissal you must have been employed continuously for two years when you are 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).
How do I know if I am classed as an employee?
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.
If you are unsure of your employment status please contact us and we will be able to advise you further.
What are the situations when dismissal is fair?
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, and capability is a potentially fair reason for dismissal as it relates to the employee’s capability to do the job they were employed to do. In the case of ill health dismissals, if the illness amounts to a disability under the Equality Act 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 license 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, or has received a criminal record.
This is designed to catch 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”.
What is automatically unfair dismissal?
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 particular 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 inquiry is called for. 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.
What should I do if I am dismissed?
If you’re threatened with dismissal (or are dismissed) you should seek legal 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 solicitor would need to review this in order 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.
What remedies are available for unfair dismissal?
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:
- Reinstatement – the Tribunal can order that the employer must treat the employee in all respects as if they were 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 dis-missed.
- Re-engagement – 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.
- Compensation – 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, which is rare. If either is requested then the Tribunal will take into account 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.
How are the basic award and compensatory award remedies calculated?
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 £475, increasing to £479 on 6 April 2016) . 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).
How do I claim unfair dismissal compensation?
Compensation for an unfair dismissal claim is made up of two components: A basic award – calculated like a redundancy payment – i.e. based on age and length of service. Also a compensatory award – based on the actual financial loss that can be attributed to your employer.
The compensatory award can vary, but is based on the loss that you can prove you suffered because your employer dismissed you. Your loss will be the difference between what you would have earned (including overtime, bonuses, pension and any other benefits) and any new income that you earn or receive after your dismissal.
The overall loss will be calculated up to the date of the hearing of your case, and there will normally be an allowance for a period of future loss as well, if you haven’t already found another job that pays roughly the same. The tribunal will certainly expect you to do everything you can to reduce (or ‘mitigate’) your loss by getting other work. It will also take into account any social security benefits and other income that you may have received
For more information, help and advice, please visit our dedicated Unfair Dismissal page.