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Unfair Dismissal

Protection against unfair dismissal is a statutory right under the provision of the Employment Rights Act 1996. Claims of unfair dismissal can only be handled by the employment tribunal, and not the county court or High Court. Only employees are protected against unfair dismissal. This fact has resulted in many court cases being fought over the definition of “employee”. In addition there must have been a “dismissal”, as opposed to a resignation which brought the employment to an end. The concept of dismissal does include those situations where the employer acted in such a way as to effectively force the employee to leave the employment rather than leave through his/her own free choice. This concept is known as “constructive dismissal”.

Most claims are now issued online. The Employment Tribunal that will usually hear the case is the one that is the local designated one for the place at which the individual had worked.

In the majority of situations an employee must have been employed by his/her employer for a continuous period of at least two years before being protected from unfair dismissal. When a dispute arises over these qualifying conditions in an employment tribunal the burden is on the claimant (the former employee) to establish that he/she has satisfied the relevant conditions of entitlement.

Since the 1st October 2006 people over the age of 65 years are not excluded from protection against unfair dismissal. Retirement was a potentially fair reason for dismissal between 2006 and 2010; but to dismiss fairly for this reason the employer was obliged to follow certain specific rules, and procedures. The Government subsequently announced that it was repealing the "default retirement age" provisions. The effect of this is that the previous procedures will not ensure that a resulting dismissal will be automatically fair. Following the repeal of the default retirement provisions employers cannot automatically rely on a set retirement process to avoid a finding of unfair dismissal. Retirement is therefore in itself not a fair reason for dismissal. This means that employers will need to be able to justify any such dismissal, and demonstrate that it was fair if it is challenged by the individual in an Employment Tribunal.

Full-time and part-time employees are protected against unfair dismissal.

In respect of dismissals that have occurred since the 6th April 2009, an Employment Tribunal is required to judge the fairness by reference to the latest ACAS Code of Practice on Disciplinary and Dismissal Procedures. The Employment Tribunal can increase or decrease an order of compensation by up to 25% if the individual or employer did not follow the relevant procedure outlined in the ACAS Code of Practice.

There are a number of exceptions for the usual two-year qualifying period for protection against dismissal.  In some cases NO qualifying period is necessary. Included amongst such cases are the situations where the reason, or main reason, for the dismissal :-

a) Was a health and safety related reason,

b) Was the assertion of a listed statutory right,

c) Was a reason connected to the refusal of Sunday work (see link) by a shop worker or betting worker,

d) Was a reason connected with the making of a “protected disclosure” (known as “whistleblowing”),

e) Was a union related reason,

f) Was the performance of or attempted performance of the function or activities of a representative or candidate for staff consultation over an occupational and personal pension scheme,

g) Was a reason connected with trade union recognition or bargaining arrangements,

h) Was a proscribed reason in connection with leave for family reasons.

Detailed advice should always be sought by an individual that believes that he/she has been dismissed for one of these reasons, or any other reason which does not require the two year qualifying period.

There is a time limit on the commencement of a claim of unfair dismissal. In the vast majority of cases a claim must be submitted to (and actually received by) the employment tribunal within three months from the effective date of the termination of employment. The actual date on which the dismissal (the termination) takes effect is counted as the first day of the three months period. Therefore, for example, if an individual’s employment ended on the 2nd March, the final date for the claim to be received by the employment tribunal is the 1st June following.

In the vast majority of cases individuals are now required to submit a complaint to ACAS under the Early Conciliation Scheme before being able to pursue that same complaint in the Employment Tribunal. The aim of the scheme is to try to resolve the dispute without having to then go to the Tribunal. ACAS cannot force the parties to agree a resolution. If the complaint cannot be resolved by ACAS during the Early Conciliation period a short extension may be agreed, but only if it appears to both sides that a solution may be reached in that extension. Otherwise the ACAS conciliator will issue a  certificate with a unique number- that will be required to be quoted by the individual if he or she proceeds to commence a claim in the Employment Tribunal.

There can be a suspension of the usual time limit while the parties seek to resolve the complaint through the Early Conciliation Scheme. This can, in certain circumstances, extend the normal three month time limit by an additional month.

In addition the Employment Tribunal might allow a claim outside the usual time limit if the claimant can demonstrate that it was “not reasonably practicable” for him/her to submit it within that time limit AND that the claim was subsequently submitted at the earliest practicable date.

In order to establish that a dismissal was in fact a fair dismissal an employer will need to demonstrate that it had relied on a potentially fair reason for dismissal. The most common fair reasons for dismissal are redundancymisconduct, and that the employee lacks capability. In all cases the employment tribunal will have to decide if the actual dismissal was fair in all the circumstances, having regard to the size, and resources available to the employer. There are other influencing factors, such as previous case law, and (where relevant) the ACAS codes of practice.

Compensation for unfair dismissal is subject to a cap. The figure is reviewed each year, and has risen consistently. The maximum “compensatory award” in respect of a dismissal that occurred on or after April 2023 the maximum figure is £105,707 (or the claimants annual pay if that was a lower figure).For dismissals that took place from April 2022 the maximum compensatory award for unfair dismissal was £93,878.

In addition the claimant can receive a “basic award”, which is calculated using a formula involving the number of years service, the age of the individual at the date of dismissal, and his/her weekly pay (which is subject to restrictions- since April 2023 the maximum figure that the Tribunal can use for the weekly pay in this calculation is £643, (or less is the actual weekly gross pay was less than £643). For dismissals that took place between April 2022 and April 2023 the weekly pay figure that is used was set at £571.

The annual reports produced by the Employment Tribunal Service have consistently indicated that the most common type of claim in the employment tribunal is that of unfair dismissal. Therefore employers need to ensure that if they are considering terminating the employment of an employee they go through the correct procedures, for example a redundancy policy (see PAYG Redundancy policy), or disciplinary policy (see link PAYG disciplinary policy).


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