If you believe your employer has dismissed you unfairly, you may be able to take legal action against them by bringing an unfair dismissal claim for compensation.
However, not all employees are eligible to bring such a claim, and strict time limits apply.
Below we look at what constitutes an “unfair dismissal”, including the eligibility and evidential requirements to bring a claim. We also look at what a tribunal is likely to award you by way of compensation if your unfair dismissal claim is successful.
What counts as unfair dismissal?
Dismissal is where your employer brings your employment to an end. This could be for various reasons, from them being forced to make financial cutbacks to deciding that you are not the right fit for their business, perhaps because of a misconduct or performance issue at work.
However, by law, employees in many cases have a right not to be unfairly dismissed by your employer. This means that if the reason given for the decision to dismiss is not a fair reason, or your employer has failed to act reasonably in all the circumstances, this may give rise to an unfair dismissal claim.
Under the Employment Rights Act 1996, there are five potentially fair reasons for dismissal:
- Conduct: where there are relatively minor but ongoing issues of misconduct, such as lateness or unauthorised absences, or more serious misconduct, like theft or violence.
- Capability: where there are issues over performance, including an employee’s ability to do their job due to long-term ill health.
- Redundancy: where there’s a reduction or cessation in the requirement for work undertaken by an employee, for example, the business is being restructured.
- A statutory restriction: where continued employment would break the law, for example, a bus driver loses their licence or a migrant worker loses the right to work in the UK.
- Some other substantial reason: this is a statutory catch-all provision permitting an employer to dismiss an employee in cases where no other potentially fair reasons apply. This could include where the business has recently undergone a restructure, but this doesn’t give rise to an actual redundancy situation.
Even if your employer is able to establish a fair reason for your dismissal, the tribunal will still consider whether they acted reasonably or unreasonably in all the circumstances in treating it as a sufficient reason to dismiss you.
When assessing “reasonableness” a tribunal will look at two main considerations: whether a fair procedure has been followed and, if so, whether the decision to dismiss fell within a band of reasonable responses available to the employer. As such, in order for a dismissal to be fair, it needs to be both procedurally and substantively fair.
What constitutes a fair procedure will depend on the reason for the dismissal. In the context of conduct and capability issues, employers should follow the code of practice on disciplinary and grievance procedures provided by ACAS. This sets out the basic requirements of fairness when dealing with a disciplinary.
Failure to follow the code will not, in itself, make an employer liable to proceedings, nor does it automatically make a dismissal unfair, although a tribunal will take this into account when considering relevant unfair dismissal claims.
The tribunal may also look at any previous decision-making, and whether the dismissal decision is consistent with decisions made about other employees in the same or similar circumstances. In some cases, a decision to dismiss may be a wholly disproportionate response to the disciplinary issue involved, especially having regard to any mitigating factors. The circumstances may instead favour a lesser disciplinary sanction, such as a written warning, providing you with a chance to improve your performance or change your behaviour.
Even in cases where the conduct complained of by your employer is so serious that it arguably justifies a decision to dismiss you without notice or pay in lieu, otherwise known as summary dismissal, your employer must still investigate the circumstances and provide you with the opportunity to defend any allegations of gross misconduct.
Who can bring an unfair dismissal claim?
To be eligible to bring an unfair dismissal claim, you must be able to show that you have been dismissed, where you can only challenge a dismissal if you can show it actually happened.
You will not be classed as having been dismissed if you have been suspended. You will also not be treated as having been dismissed if you have resigned by choice, unless you felt forced to resign because you were pressured to hand in your notice or your employer did something that amounted to a serious breach of contract. In these circumstances, you may be able to treat yourself as having been unfairly dismissed. This is known as constructive dismissal.
You must also be classed as an ‘employee’, and have worked for your employer for a minimum period of 2 years if you started your job on or after 6 April 2012 (reduced to 1 year if you started your job before 6 April 2012). You’ll be required to meet any relevant continuous service requirement, unless you were dismissed for an automatically unfair reason.
An automatically unfair dismissal is one that is so inherently unfair that an employee is not usually required to prove any qualifying period of employment. This is because special protection is afforded to employees where the dismissal violates their basic employment rights. It is generally automatically unfair if you are dismissed because:
- You’re pregnant or on maternity leave
- You’ve asked for your legal rights at work, for example, to be paid minimum wage
- You took action about a health and safety issue in the workplace
- You’re a trade union member and participated in trade union activities, including official industrial action or you were acting as an employee representative
- You’ve reported your employer for wrongdoing, ie; whistleblowing.
There are also several other grounds that may mean you have a basis upon which you can argue an automatic unfair dismissal. This list is not exhaustive.
Once an automatically unfair reason for your dismissal has been established, your employer will no longer be able to justify or defend their decision-making. This means the tribunal will have no cause to consider whether or not the employer acted reasonably, or failed to follow a fair procedure, as is the case in an ordinary unfair dismissal claim. Instead, the reason, in itself, will be treated as automatically unfair, with no further consideration as to the reasonableness or unreasonableness of the decision, or the procedural fairness of your employer’s actions.
If you’ve been dismissed because of a reason relating to any one of the protected characteristics under the Equality Act 2010, you may also have a claim for unlawful discrimination. For instance, selection for redundancy on grounds of nearing retirement age would be unlawful age discrimination, or dismissing you because of ill health can amount to unlawful disability discrimination — unless your employer has made reasonable adjustments to remove any disadvantage at work that you may suffer because of this, but to no avail.
What will you need to show for an unfair dismissal claim?
In either an ordinary or automatic unfair dismissal claim, you must show that you have been dismissed. Evidence of dismissal could be an official termination letter, or emails and texts from your employer. In practice, your employer may not always provide an honest reason for your dismissal, but asking them to provide a written explanation of their decision will, at the very least, provide evidence of a dismissal. If you’re unclear of the reason for your dismissal, provided you have 2 year’s service (just 1 year if your employment began before 6 April 2012), you have the right to ask your employer for a written statement giving the reasons why you’ve been dismissed. The employer will then have 14 days to provide you with a response.
Having been dismissed, you will have a period of 3 months less one day from the date of your dismissal or the date when your notice period ran out to lodge an unfair dismissal claim before the employment tribunal. You will then be invited to participate in early conciliation with your employer as a mean of resolving the matter amicably. If the matter cannot be resolved on mutually agreeable terms, you’ll need to prepare your claim for a tribunal hearing.
It’s for your employer to show that the decision to dismiss was fair and reasonable in all the circumstances. Even in cases where you’re alleging that your dismissal was for an automatically unfair reason, it’s still for your employer to prove that the reason asserted was not the real reason. Still, in practice, you’ll need to provide detailed witness and documentary evidence in support of your claim, including evidence in support of any assertion of automatic unfair dismissal, for which legal advice should be sought at the earliest possible opportunity.
How much is compensation in an unfair dismissal claim?
If your unfair dismissal claim is successful, an order may be made by the tribunal for your employer to reinstate you in your old job or re-employ you in a different role. You may also be entitled to an award of damages. This will comprise a basic and compensatory award.
The basic award is a fixed sum to be calculated on the basis of your age, gross weekly pay and length of service. The statutory formula for calculating a basic award is:
- 0.5 weeks’ pay for each full year where you were under 22
- 1 week’s pay for each full year where you were 22 to 40
- 1.5 weeks’ pay for each full year where you were 41 or over.
The pay is capped at £544 per week (as from 6th April 2021), up to a maximum of 20 years service. This means that the sum of £16,320 is the maximum basic award you can receive.
The compensatory award will reflect any loss of earnings, plus a sum of money to compensate you for the loss of your statutory rights accrued through continued service with your former employer. In the context of conduct and capability dismissals, this award could be increased by up to 25% for any unreasonable failure on the part of your employer to follow the ACAS code of practice. If, however, your claim only succeeds on the grounds of procedural unfairness, where you would have been dismissed in any event, the tribunal may limit any compensatory award to reflect the fact that following a fair procedure would not have altered the outcome.
In most cases, any compensatory award will be capped at £89,493 (from 6th April 2021). This will also be the lower of the maximum statutory limit or a year’s salary, although there are certain cases where the award will be uncapped, for example, where you’re been dismissed for whistleblowing or taking action about a health and safety issue at work.
DavidsonMorris’ team of employment law specialists offer support and advice to employees facing difficulties in the workplace.
If you’ve been threatened with dismissal, there may be steps you can take to either safeguard your position at work or to walk away with a settlement package.
If a decision to dismiss you has already been made by your employer, and your employment has come to an end, take advice to determine if you have a potential claim for unfair dismissal.
In either case, by seeking immediate legal advice from an employment law specialist, this can help to protect and preserve your employment rights, where often there are tactical ways of dealing with an actual or threatened dismissal without recourse to litigation. Still, where an unfair dismissal claim cannot be avoided, it is important for employees to understand the basis of these types of claim and the time limits within which a claim can be brought.
Contact our employment lawyers for advice and guidance on any aspect of unfair dismissal claims.
Unfair dismissal claim FAQs
What is the average payout for unfair dismissal UK?
Payouts for unfair dismissal can vary significantly depending on the reason for the dismissal and the circumstances surrounding this. The maximum basic award is £16,320, with a cap on most compensatory awards of £89,493, with average awards of around £10,000.
How much money do you get for unfair dismissal?
The amount of any basic award of damages for unfair dismissal will depend on your age, gross weekly pay and length of service. You may also be entitled to a compensatory award to reflect, for example, any loss of earnings.
What qualifies as unfair dismissal?
A dismissal will qualify as unfair if, for example, the reason the employer provides for the dismissal was not genuine, the reason was unfair (or automatically unfair) or the employer acted unreasonably in all the circumstances.
How do you prove unfair dismissal?
To prove unfair dismissal, you must show that you’re an employee with the qualifying period of service and you've been dismissed. It’s then for the employer to show that the dismissal was fair and reasonable in all the circumstances.
Last updated: 2 April 2021