Dismissal from employment can be stressful, disruptive, and legally complex. In England and Wales, employees are protected by statutory rights designed to ensure that employers act fairly and reasonably when ending employment. Understanding whether a dismissal is unlawful depends on legal tests set out in employment legislation and case law. Both employees and employers benefit from knowing how these rules operate, because early knowledge often prevents disputes from escalating into costly tribunal proceedings.
Who can bring an unfair dismissal claim
Most employees have the right to claim unfair dismissal if they have at least two years of continuous service with their employer. Continuous service usually runs from the employee’s start date until termination, although certain absences such as sickness or maternity leave normally still count toward service.
There are important exceptions to the two year rule. Some dismissals are automatically unfair and do not require any minimum service. These include dismissals related to pregnancy, maternity rights, whistleblowing, trade union membership, asserting statutory employment rights, or health and safety activities. If a dismissal falls within one of these categories, an employee may be able to bring a claim regardless of length of employment.
Strict time limits apply. A claim must usually be submitted to an Employment Tribunal within three months less one day from the effective date of termination. Before issuing proceedings, claimants must notify Acas and start early conciliation. This is a mandatory step designed to encourage settlement and avoid litigation where possible. Missing the deadline can prevent a claim entirely unless exceptional circumstances apply.
What makes a dismissal unfair
For a dismissal to be lawful, an employer must show both a potentially fair reason and that dismissal was reasonable in all the circumstances. The law recognises five potentially fair reasons for dismissal:
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Conduct
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Capability or qualifications
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Redundancy
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Statutory illegality
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Some other substantial reason
Even where a fair reason exists, the dismissal may still be unfair if the employer fails to follow a fair procedure. Employers are generally expected to carry out a reasonable investigation, inform the employee of concerns, allow them to respond, hold a meeting, and provide a right of appeal. Tribunals assess whether the employer acted within a reasonable range of responses that a reasonable employer might adopt.
Procedural fairness is often decisive. An employer with a strong substantive reason may still lose a case if they fail to follow a fair disciplinary or redundancy process. Conversely, a fair process can strengthen an employer’s defence even where facts are disputed.
Compensation and remedies
If an Employment Tribunal finds that a dismissal was unfair, it has discretion to order remedies. The primary remedies are reinstatement, re engagement, or compensation. In practice, compensation is the most common outcome.
Financial awards usually consist of two elements. The basic award is calculated using a statutory formula based on age, length of service, and weekly pay subject to a statutory cap. The compensatory award is intended to compensate the employee for financial losses caused by the dismissal, such as lost wages and benefits. This award is subject to a statutory maximum unless the case falls into certain categories such as whistleblowing or health and safety dismissals, where the cap does not apply.
Tribunals also consider whether the employee contributed to their dismissal through their conduct and whether they took reasonable steps to mitigate their loss by seeking alternative work. Evidence such as emails, contracts, performance reviews, and meeting notes can therefore play a crucial role in determining outcome.
Avoiding disputes through good practice
Employers can significantly reduce the risk of claims by implementing clear workplace policies, training managers, and documenting decisions carefully. Employees can protect their position by keeping records, raising concerns internally where appropriate, and seeking legal advice promptly if dismissal becomes likely.
Fairness, transparency, and communication are often the key factors that determine whether a dismissal leads to litigation. Taking professional advice at an early stage can prevent costly mistakes and resolve issues before positions become entrenched.
If you are facing dismissal or defending a claim, Penerley can guide you with clear, strategic advice tailored to your situation. Contact our employment law team today to protect your rights, your reputation, and your future. Early legal guidance can make a decisive difference to the outcome.
