Unfair dismissal occurs when an employer terminates an employee's contract without a fair reason or fails to follow a proper process. It's not just about why someone is dismissed, it's also about how the decision is made. Both the reason and the method must meet legal standards.

What makes a dismissal unfair?

Several key elements determine whether a dismissal is unfair.

1. Lack of a fair reason

Employers must have a genuine and legally recognised reason to dismiss an employee. These include:

• Misconduct (e.g. theft, repeated lateness, assaulting or abusing other employees)
• Poor performance or lack of capability
• Redundancy (e.g. the position you hold is no longer required by the business)
• Statutory restrictions (e.g. loss of licence or regulatory approval required for the job)
• Some other substantial reason (e.g. company restructuring)

These five reasons are the only potentially fair categories under UK law, but their interpretation by tribunals can be broad. If no valid reason is given, the dismissal may be challenged as being unfair.

2. Failure to follow a fair procedure

Even when a fair reason exists, the employer must follow a proper process. This includes investigating the issue, providing warnings or improvement opportunities where appropriate, holding a formal meeting, and giving the employee a chance to respond. The ACAS Code of Practice on Disciplinary and Grievance Procedures offers guidance on how this should be done.

3. Automatically unfair reasons

Some reasons for dismissal are always unfair, regardless of how long the employee has worked or the procedures followed. These include being dismissed for:

• Being pregnant or on maternity leave
• Requesting flexible working
• Whistleblowing (reporting wrongdoing)
• Participating in official industrial action
• Asserting a statutory right (such as the right to minimum wage or holiday pay)

In such cases, an employee doesn't need any qualifying period to bring a claim.

4. The qualifying period

Currently, for most claims of unfair dismissal, employees must have been continuously employed by their employer for at least two years. However, this requirement doesn't apply in cases of automatic unfair dismissal or discrimination.

What might count as unfair dismissal?

Some common examples include:

• Terminating an employee's contract for raising health and safety concerns
• Dismissing someone due to pregnancy or maternity leave
• Letting an employee go because they took part in lawful industrial action
• Failing to follow a proper disciplinary process before dismissal for performance issues

These situations can give rise to a claim at an Employment Tribunal.

Constructive dismissal

Constructive dismissal may be considered a form of unfair dismissal. Constructive dismissal occurs when an employee feels forced to resign because their employer has seriously breached the terms of their employment contract. This could involve a single serious incident or a pattern of behaviour that makes the working environment intolerable. Common examples include not being paid, being bullied or harassed, or having duties changed without consultation. The employee must resign soon after the breach and clearly state that this is the reason for their departure.

What happens if a dismissal appears to be unfair?

If an employee believes they have been unfairly dismissed, they can make a claim to an Employment Tribunal. Before doing so, they must first undergo Early Conciliation with ACAS, which provides an opportunity to resolve the matter without going to court.

If the tribunal finds in the employee's favour, it may:

• Order reinstatement (return to the job)
• Order re-engagement (a similar role)
• Award compensation (based on factors like loss of earnings)

The maximum compensation is typically capped, although there are exceptions for whistleblowing or dismissals related to discrimination or other protected grounds. More guidance can be found on the GOV.UK website.

Why it matters

The law governing unfair dismissal helps ensure that people are not dismissed arbitrarily or without the proper procedures being followed. For employers, it serves as a reminder to follow clear and lawful procedures. For employees, it provides a route to challenge decisions that feel unjust.

If you're facing dismissal - or considering dismissing a staff member - it's essential to seek professional advice before taking any action. The cost of getting it wrong can be high, both financially and in terms of reputation.