Unfair dismissal

Employees with at least 2 years’ continuous service have the statutory right not to be unfairly dismissed.

This means that if you are thinking of dismissing an employee, the reason for the dismissal must one that is fair.

If the reason for dismissing an employee does not fall within one of the fair reasons briefly described below you may, in the event of dismissing an employee, find that you face a claim against you in the employment tribunal.

Fair reasons for dismissal

The reason for dismissing an employee must fall into one of the categories set out below for the dismissal to be considered a fair dismissal.


Misconduct by an employee is a potentially fair reason for dismissal. The misconduct can either be a single act of gross misconduct or a number of smaller acts of misconduct. Misconduct can include theft, dishonesty, unauthorised absences from work, and refusing to carry out a reasonable request.


If an employee does not have the required level of capability or qualifications for their role then it is potentially a fair reason for you to dismiss them because of this. Capability dismissals fall into two categories; dismissals for poor performance and dismissals due to ill-health. It is important to ensure that any dismissals proposed on the grounds of an employee’s ill-health should be carefully considered when the ill-health is or maybe related to a disability that the employee has. Failure to do so could mean that you risk the employee pursuing a claim for unlawful disability discrimination.


Redundancy is another potential fair reason for dismissal. There must be a genuine redundancy situation and you must ensure that a fair process is followed.

Redundancy occurs in three situations:

  1.  closure of the entire business;
  2. closure of a site of the business; and
  3. a reduced requirement for the number of employees required to carry out work of a particular kind.

It is important to ensure that redundancies are dealt with carefully. There are a number of circumstances where selection for redundancy is automatically unfair, for example being selected for redundancy because an employee has taken time out of work to attend jury service.


The decision to dismiss an employee on the basis that their continued service to you would be illegal is a potentially fair reason for dismissal. To put this into context, it would follow that an employee would have been fairly dismissed if for example, their driving licence had been revoked and they were employed as a delivery driver. It would be illegal for the employee to continue to perform their role as delivery driver without a valid driving licence.

Some other substantial reason

If your reason for dismissing an employee does not fall within one of the fair reasons noted above, your reason could fall into the “some other substantial reason” category. A personality clash between an employee and others which causes an impact on production is an example of some other substantial reason to dismiss an employee.

In addition to having a fair reason to dismiss an employee, you must also follow a fair process and the decision to dismiss must fall within the range of reasonable responses that a reasonable employer would make in the same circumstances.

Automatic unfair dismissals

There are certain situations where the dismissal of an employee is deemed as automatically unfair. An employee does not need the required two years’ continuous employment to be eligible to claim for automatic unfair dismissal.

It is therefore important that a careful approach is taken when considering the dismissal of an employee.

A dismissal will be classed as automatically unfair in the following circumstances:

  • dismissals relation to pregnancy, statutory maternity, paternity, adoption, parental, shared parental leave and time off for dependents;
  • dismissals relating to whistleblowing; and
  • dismissals relating to trade union membership.

Remedies for unfair dismissal

An employee who pursues a successful claim against you for unfair dismissal has the choice of three remedies.

  1. Reinstatement to the same role in the business;
  2. re-engagement in the business but in a different role; and
  3. compensation

Compensation is the most common remedy sought by employees who claim unfair dismissal. It consists of two main elements, the basic award and the compensatory award.

The basic award is based on a calculation which takes into account the employee’s age, length of service and pay. The purpose of the compensatory award is to put the employee back in the financial position they would have been had they not been unfairly dismissed. The award is to cover the employee to the point they secure another role at the same rate or for a period which the employment tribunal thinks is fair and just but is limited to a years’ earnings.

Employees have a duty to ensure that they take reasonable steps to reduce their losses for example by securing new employment as soon as possible. If an employee fails to do this the employment tribunal may reduce the amount of compensation awarded to them.

Duty to comply

There is also a duty for you to comply with the ACAS Code of Practice which sets out the procedures to be followed when dealing with employees including the procedure to be conducted when dismissing an employee. If you fail to comply with the ACAS Code of Practice the employment tribunal may increase the award made to the employee.

Equally, there is also an obligation on employees to cooperate with the procedures and failure to do so could mean that their award is reduced by the employment tribunal.


It may be in the interests of your business to ensure that following the dismissal of an employee, the likelihood that the employee would seek to pursue a claim against the business is low.

Regardless of the reasons and the procedure followed leading to the dismissal a settlement agreement is a perfect means of ensuring that a dismissed employee does not pursue a claim against you following their departure.

In short, settlement agreements set out that the employee agrees not to pursue any employment related claims against the employer in return for a lump sum payment made by the employer.

Settlement agreements contain confidentiality clauses which can be tailored to ensure that reputational damage by the employee is restricted. The agreements can also be drafted to contain remedies for employers for breach by an employee. For further information please see our settlement agreement page.

What to do if you receive a claim

The employment tribunal will send you a copy of the claimant’s ET1 form. This is the employee’s claim and you will have 28 days to respond. It is important to act quickly because if you fail to submit your response within time you may find that risk the employment tribunal making a judgment in default against you.

Verisona Law can help assess the merits of the claim and advise you on how best to act for example defending a claim or making an offer to settle.

How can Verisona Law help?

Verisona Law has a team of experienced employment law advisers who can help your business in any situation that comes your way. From dealing with grievances to conducting performance improvement programmes, our team will ensure that every step you take is done in the correct manner and will help reduce the risk of unfair dismissal claims.