Unfair Dismissal

An employee who has not been dismissed properly may have the right to claim compensation on grounds of unfair dismissal or discriminatory dismissal. They may also may be owed redundancy payment, or have the right to be paid for an unfulfilled contractual notice period.

Who can claim compensation for unfair dismissal?

Certain motivations for dismissing an employee will automatically be viewed as unfair. These include laws surrounding whistleblowing and issues relating to maternity – in such cases there is no minimum employment requirement and compensation may be unlimited.

Once a worker has undertaken at least one year of continuous employment with an employer, they are eligible for claiming unfair dismissal should they be able to prove this is the case.

Fairness is a key component in an employee being properly dismissed and therefore an employer must ensure several rules are adhered to:

there is fair reason for the dismissal – for example employee wrongdoing, redundancy or an inability to do the job;
the proper dismissal procedures were followed and the dismissal was fair in all circumstances.

Automatically unfair dismissal

Certain motivations for dismissing an employee will automatically be viewed as unfair. These include laws surrounding whistleblowing and issues relating to maternity – in such cases, there is no minimum employment requirement and compensation for automatically unfair dismissal may be unlimited.

Fair versus unfair dismissal – questions to consider in dismissal situations

In the case of a redundancy, an employer has to consider if the proper redundancy procedures were followed. For example, was the employee given the opportunity of alternative employment?
Was the process of choosing employees for redundancy a fair and objective one?
Was there proper warning of, and consulting about, the redundancy?
Where there is employee wrongdoing, was the dismissal a reasonable response to the employee’s behaviour, and was the problem behaviour reasonably looked into before the dismissal took place?
Where an employee has performed badly, was the employee given fair warning of the shortcomings of his or her performance and given the chance to improve?

In the case of both misconduct and bad performance, it may also have been necessary for the ACAS Code of Practice on Discipline and Grievance Procedures to be followed.

Where procedure should have been followed but has not been, there may also be penalties for both the employer and employee, including a 25% reduction in any compensation for the employee and a potential 25% increase in employee compensation where the employer fails to comply. The ACAS Code of Practice on Discipline and Grievance Procedures does not apply to redundancy situations.

Compensation for unfair dismissal

Basic award – up to £430 per week (depending on weekly salary) x 0.5, 1 or 1.5 (depending on employee’s age), unless a statutory redundancy payment has been made to the employee, in which case there is no basic award made.

Compensatory award – up to £72,300, depending on losses suffered. This is based on the amount of time an employee has been unemployed, as far as is just and equitable to consider this, as well as steps taken by the employee to find another job.

Note; if a dismissal is found to be unfair for purely procedural reasons and an Employment Tribunal feels that a fair procedure would have made no difference, this can result in reduced or no compensation.

Wrongful dismissal

Where an employer wants to dismiss an employee, the employer must either allow the employee to work out the notice period set out in the employment contract (subject to a statutory minimum of one week for every year worked), or provide a payment instead.

Wrongful dismissal will occur where an employer has not followed the procedure to provide a notice of dismissal as set out in an employee’s contract. The only exception to this is where there has been gross misconduct on the part of the employee.

A payment in lieu of notice can be made by an employer who wants an employee to leave straight away, where the employment contract allows for this. The payment should reflect the length of the notice period in the employee’s contract. The employee does not need to work out the notice period where a payment such as this is to be made.

Where an employee believes they have been wrongfully dismissed, there is still a requirement for that employee to take reasonable steps to try and find another job. Anything that is earned – or ought to have been received – during the period after the dismissal and before the end of the notice period will need to be taken into account when a dismissed employee is calculating the loss that resulted from the wrongful dismissal. The loss will be the amount that the employee would have received (net pay and benefits) had they not been wrongfully dismissed, less the earnings that were made during what should have been the employee’s notice period. Damages for wrongful dismissal don’t attract tax up to a threshold of £30,000.

Redundancy

An employee who has been continuously employed for a minimum of two years is entitled to statutory redundancy pay. This amounts to £430 a week for each year of employment up to 20 years; multiplied by 0.5, 1 or 1.5 depending on the employee’s age. There may also be specific redundancy provisions contained in a contract of employment that will usually provide for payments over the statutory amount.

In order for a redundancy to be fair, the dismissal must be connected to the employer no longer carrying on its business (or no longer carrying out its duties at the place where the employee works) or there must have been a reduction or ending in the need for work of a certain kind that the employee does.

If an employee is offered ‘suitable’ alternative employment (i.e. a position with similar or same salary, benefits, position and responsibility), the right to redundancy pay may be lost if the offer is unreasonably turned down. Where alternative employment is offered there must be a four-week trial, and if during that time an employee decides, with good reason, they don’t want to carry on in the alternative employment they can choose to accept a redundancy payment instead.

Constructive dismissal

Constructive dismissal will arise where an employer has fundamentally breached the terms of an employment contract and the employee has subsequently resigned. (For more information see Constructive Dismissal.)

Discrimination and unfair dismissal

Discrimination may be an issue where an employee has been dismissed because of issues relating to race, age, sex, religion, sexual orientation or philosophical belief. In this circumstance, you may also be able to claim discrimination at the Employment Tribunal.

Time limits for making an unfair dismissal claim

Time limits can be complex and will depend wholly on the circumstances. However, in general, unfair dismissal or breach of contract resulting in wrongful dismissal claims should be made within three months less one day from the date that the employment ends.

If the breach of contract claim exceeds £25,000 this is brought before the County Court or High Court, not an Employment Tribunal, in which case the time limitation is six years from the date the contract was breached.

Discrimination claim: a discrimination claim must be made before three months from the date of the discriminatory act.

Statutory redundancy payment claim: redundancy payment claims need to be made within 4 weeks of your last non-working day from the date of the termination of employment.

Legal advice for unfair dismissal

If you are considering bringing a claim to the Employment Tribunal, or the County Court or High Court, you should seek legal advice as soon as possible. An employment law specialist will be able to advise you whether your dismissal is considered automatically unfair, unfair, wrongful or constructive dismissal in the eyes of the law. This will enable you to make the correct type of claim to the Employment Tribunal. They can also provide additional legal advice when discrimination has occurred and increase the likelihood of a successful claim.

Complete the below claim questionnaire to get some guidance about unfair dismissal.