Employment law

Unfair dismissal – a concise guide for employers

Employees have a legal right not to be unfairly dismissed. The law surrounding unfair dismissal is complex, but employers must ensure they act within the law when dismissing any employee. This guide outlines what you need to know.

Read on or click a link to jump ahead:

• What is unfair dismissal?
• What are the different types of unfair dismissal?
  • Constructive unfair dismissal
  • Automatic unfair dismissal
• What is the qualifying period?
• How can an employee make a claim?
• Unfair dismissal compensation – how much could an employee get?
• How to prevent an unfair dismissal claim?
• Popular unfair dismissal solicitors in the UK
• Conclusion

What is unfair dismissal?

Unfair dismissal is when an employer terminates an employee contract without fair reason to do so. An employee also has the right to claim unfair dismissal if their dismissal is carried out wrongly. To avoid an unfair dismissal claim it is therefore important that employers abide by the rules, whether they are considering a dismissal or carrying one out.

According to guidelines used in employment tribunals, there are fair reasons you can fire an employee:

1. Capability/Performance – may apply if an employee lied about their experience or health resulting in them being unable to fulfil their duties.
2. Conduct/Misconduct – can include theft of company property or information, abusive behaviour, taking time off without prior permission, regularly arriving to work late and more besides.
3. Redundancy – employers must have a clear redundancy policy which must be followed with care. Employers cannot single out individuals for redundancy or appear to make random redundancies.
4. Breaking the law – if an employer breaks the law outside work hours, an employer can dismiss them from employment for gross misconduct or bringing the name of the company into disrepute.
5. Some other substantial reason (SOSR) – this is designed as a catch-all, deliberately wide in scope to provide employers some protection against employees who may actively want to get fired to bring a case for unfair dismissal. SOSR includes such things as being fired due to an important client asking for an employee to be removed or refusal to work with a particular colleague or piece of equipment.

If an employer can prove that the reason for the employee’s dismissal does come under one of the above categories, it is still down to the Employment Tribunal to decide “in accordance with equity and substantial merits of the case” as to whether or not the dismissal was fair.

What are the different types of unfair dismissal?

There are two main types of unfair dismissal;

1. Constructive unfair dismissal
2. Automatic unfair dismissal

Constructive unfair dismissal

Constructive dismissal is when an employer forces an employee to leave their job. If an employer does something which seriously breaches an employee contract an employee can claim constructive dismissal. To succeed in winning a claim against the employer, an employee must prove that the employer breached the terms of the employment contract, forcing them to resign in response.

Automatic unfair dismissal

Automatic unfair dismissal is when an employee’s dismissal violates an individual’s statutory legal rights.

In many cases, reasons for dismissal considered automatically unfair will be due to an employer violating one or more of an employee’s employment rights. There are around 60 grounds for an employee to claim automatic unfair dismissal, but the most common include:

• being pregnant or on maternity or paternity leave
• being a trade union member or representative
• asking for a legal right, e.g. to be paid the National Minimum Wage
• doing jury service
• taking action or proposing action over a health and safety issue
• refusal to work over 48 hours a week, on average

What is the qualifying period?

To make a claim for unfair dismissal in the UK, individuals must bring the claim within three months of either the date of dismissal or the final day of their notice period.

How can an employee make a claim?

To bring an unfair dismissal claim to the Employment Tribunal, an individual must:

1. Be an employee, not working through an agency or self-employed
2. Normally have at least two years continuous employment with the company
3. Make the claim within three months of the dismissal or the final day of their notice

To make a claim, a person must:

• Be able to prove the reason of dismissal – unless an employer can prove that the reason for the dismissal was fair and reasonable (see above), it is up to the Employment Tribunal to decide whether the dismissal was fair, taking into account the “equity and substantial merits of the case”.
• Tell Acas they want to make a claim, the other party (the employer) in the dispute will respond to the claim.
• Acas will offer ‘early conciliation’ – allowing the opportunity for both parties to discuss the dispute without having to go to tribunal.

You may be able to skip contacting Acas if:

• You’re making a claim with another party who has already completed this step
• Acas has no power to conciliate on some or part of your claim
• The employer has already contacted Acas and you have evidence that this has happened
• Your claim allows you to apply for ‘interim relief’ and it’s within 7 days of the dismissal – interim relief is when a tribunal orders an employer or business to give the job back to the person they have sacked until the hearing happens
• To continue with a claim and proceed to an employment tribunal you will need an Acas early conciliation certificate number
• Write a claim statement – this should describe the work problem explaining the background details, dates and the names of other people involved. The statement should also describe events accurately and detail any witnesses or evidence.
• You can make a claim for unfair dismissal online here.

Unfair dismissal compensation – how much could an employee get?

Compensation payments for unfair dismissal are often made up of:

Basic award – this is a multiple of a week’s pay which is calculated through a formula which takes into account years of service and the age of the claimant.

The total sum for the basic award is calculated using the following formula:

• 0.5 week’s pay for each year worked between 18th and 22nd birthday
• 1 week’s pay for each year worked between 22nd and 41st birthday
• 1.5 week’s pay for each year worked after 41st birthday

In the case of a long serving employee, only the most recent 20 years’ service are taken into account.

This formula is also the one used when calculating statutory redundancy pay.

Many awards are also inflation-linked.

The basic award may be reduced in the following circumstances:

• if the employee unreasonably refuses to accept an offer of reinstatement
• if the employee is found to have contributed to their own dismissal through culpable conduct
• if any payments have already been made to the employee, e.g. payment in lieu of notice or redundancy payments
• if the employee has been unfairly dismissed in relation to a trade union “blacklist” and has already received a Basic Award in respect of the same dismissal.

Compensatory award – this is made up of several different elements, including:

• Loss of wages – up to the date of the Tribunal hearing, this covers the time between the end of the notice period, or dismissal, to the date of the hearing itself. Any earnings from a new employer will be subtracted.
• Future loss of wages – this element is not included if a new, higher paying job has been found. If the employee has found a new but lesser paid job the Tribunal will estimate the future loss. In most cases, Tribunals award between 6 and 12 months for future loss, but it can be significantly more.
• Loss of benefits – such as car, health benefits, share options etc.
• Loss of pension rights /contributions
• Expenses in seeking new work

Although case law has established that payment is not made for stress or injury to feelings in unfair dismissal claims, the maximum award limit has increased to over £70,000 following the introduction of the Employment Relations Act 1999.

How to prevent an unfair dismissal claim?

To avoid an unfair dismissal claim you should always ensure that:

1. You have up-to-date and well-detailed employment contracts
2. Have correct dismissal procedures in place and ensure all steps are followed correctly in the event of a dismissal. Disciplinary procedures should adhere to the Acas Code of Practice
3. Inform your employees of the disciplinary rules – by law, employers should have clearly written disciplinary rules written down. These written rules should be located somewhere accessible by staff at any time, ideally a staff handbook, employee contracts or in a statement of employment. A failure to have easily accessible written rules could result in a successful claimant getting two to four weeks’ pay
4. Genuinely seek to resolve the situation; no matter how frustrating the situation, there’s often an underlying reason for an employee’s difficult behaviour. Listen carefully to what your employee is saying and talk to other members of staff to see if others are feeling the same way. There may be constructive actions you can take to fix the situation, and potentially prevent dismissal procedures.
5. Seek legal advice from an employment solicitor or HR practitioner. This will ensure expert guidance through the process and may also be act as a useful third-party observer.
6. Be aware of the rules around when it is definitively not okay to dismiss an employee, some of these have already been mentioned above.

Popular unfair dismissal solicitors in the UK

Conclusion

Being aware of the sometimes-complex laws surrounding unfair dismissal is the first step in avoiding claims. As an employer it’s your responsibility to ensure you do the right thing by your employees.

While it may appear arduous, complying with employment law could save you a whole lot more grief and hassle if not doing so lands you with a disgruntled employee making a claim against you.

For the best protection, ensure your employees all have comprehensive and up-to-date employment contract. Make sure you and your management team adhere to disciplinary rules and that your employees have easy access to them.

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