Unfair Dismissal (employers and businesses)

If you’ve just dismissed an employee or are considering doing so, then that employee may be able to claim to have been unfairly dismissed.

What is unfair dismissal?

It is a claim brought under the Employment Rights Act 1996. Whether a dismissal is fair or not depends on two things – the reason for and the manner of the dismissal. The employer must have a fair reason and should follow a fair procedure. For example, in conduct, or rather misconduct cases, the employer should follow a fair disciplinary procedure.

Does an employee have to have been employed for a certain length of time?

Yes, in most cases, the employee must have been employed for two years before it is possible to bring a claim. However, in certain situations, for example where the employee is dismissed for whistleblowing, there is no qualifying period to bring a claim. Also, employers should think about whether an employee could have another type of claim, such as discrimination.

How and where is a claim brought?

Before bringing a claim, the employee must contact ACAS and go through its early conciliation procedure. The employee can then bring a claim in the Employment Tribunal. These days it is possible to start a claim on line.

Is there a time limit?

Yes. This is generally three months less one day from the effective date of dismissal but can be extended in limited circumstances. The time will be paused for the length of time it takes to complete the early conciliation procedure. The rules are quite complicated but employees must start the early conciliation procedure before the time limit expires.

What does the employment tribunal do?

There may be some procedural matters to go through first but, when hearing a claim, the employment tribunal decides what the employer’s reason for the dismissal was and whether the employer went about it in a fair way and looks at its size and resources in reaching its decision.

What is a fair reason?

There are five potentially fair reasons set out in the Employment Rights Act. These are:

  • conduct (or misconduct)
  • capability or qualifications
  • redundancy
  • breach of a statutory enactment
  • some other substantial reason (which catches other reasons not referred to above)

What happens?

It is for the employer to show the reason and the tribunal then decides whether the employer acted reasonably in treating that reason as a sufficient fair reason for dismissing the employee. The employment tribunal will look at how the employer handled the dismissal and whether the dismissal was within a reasonable range of responses.

Remedies? How much can it cost?

There are three remedies available to a successful employee. The first one is reinstatement. This is where the employee goes back to work as if nothing had ever happened. It is very rare, since most of the time the relationship between the parties will have broken down. The second is re-engagement. This is where the employee is re-engaged to another but similar or more appropriate job. The third is compensation and this is the most popular claim and the remedy most ordered.

There are two types of compensation; a basic award and a compensatory award.

A basic award is calculated in the same way as a statutory redundancy payment. The cap on a week’s pay is £489 from April 2017.

The employment tribunal awards what is “just and equitable” when making a compensatory award. It looks at the employee’s net loss following the dismissal (take home pay and value of any benefits) and makes a deduction for any contributory fault, alternative earnings or other monies received, such as job seekers’ allowance. An employee is under a legal obligation to mitigate his or her loss by making reasonable efforts to secure alternative employment.

The compensatory award is subject to a statutory cap (which increases most years). It is presently the lower of either 52 weeks’ gross pay or £80,541 after 6 April 2017.

What should I do?

If you have a problem or think that you may have one contact Roberta. Acting pre-emptively or promptly is very often the key to you saving the expense of a claim and the reputational damage of losing at an employment tribunal.