What is the legal test for unfair dismissal?
An employer cannot simply dismiss an employee just because it feels like it. There must be a genuine reason.
Under section 98 of the Employment Rights Act 1996, there are 5 potentially fair reasons for dismissal, which are:
In deciding whether the dismissal was fair or unfair (having regard to the reason shown by the employer) an employment tribunal will consider:
The legal test is whether the employer has acted within a band or range of reasonable responses. That range may include the employer who is quite lenient but also the employer who takes a harsh view on the same facts.
The employer has the burden of proving the dismissal was fair.
In short, challenging an employer’s decision to dismiss on the basis that objectively no reasonable employer would have dismissed, is difficult.
However, there is a second aspect to fair dismissals, which may assist employees. The employer must also have acted in a procedurally fair way. If the employer fails to do so, the employee may succeed with an unfair dismissal claim, even if the dismissal may have been otherwise fair.
Misconduct dismissals
In misconduct dismissals, the case of British Home Stores Ltd v Burchell sets out the test by which employment tribunals decide whether employers have acted reasonably.
In terms of misconduct, the Burchell case can be reduced down to a 3 step test:
It does not matter whether an employee was in fact guilty of misconduct but whether it was reasonable of the employer to decide that they were guilty and then dismiss them. In other words, did the employer come to a reasonable decision after a reasonable investigation?
Examples of what might make a decision to dismiss appear unreasonable include:
Dismissals for SOSR
Employment tribunals have found a dismissal to be fair for SOSR, in the situations as follows:
Can a dismissal for a potentially fair reason still be unfair if the correct procedure has not been followed?
Dismissals occur for many reasons, which can include work performance issues or long-term sickness absence, conduct (eg failing to follow a reasonable management instruction), breaching company rules and theft (to name but a few) but it also includes redundancy.
When it comes to redundancy, many employers, however well-intentioned, make errors in the consultation and/or in the selection process.
Claims for redundancy-based unfair dismissal are just as legitimate as for any other reason for dismissal.
Please see the web page Redundancy.
Are there limitations on bringing a claim for unfair dismissal?
An employee must have at least 2 years continuous service with an employer in order to be able to bring an employment tribunal claim for unfair dismissal.
A worker who is employed under a contract for services cannot bring a claim for unfair dismissal.
Are there any exceptions to the 2-year rule for claiming unfair dismissal?
Yes, if the dismissal is automatically unfair. In such cases, there is no minimum qualifying period of service to bring a claim.
A dismissal will be automatically unfair is the reason (or principal reason) as follows:
In the following cases, there will still be an automatic unfair dismissal, but an employee will need the qualifying period of service (ie 23 months and 3 weeks) in which to make a claim:
What compensation can an employment tribunal award for unfair dismissal?
If an ex-employee is successful at the final hearing, an employment tribunal can make financial awards (dependent on the complaint) as follows:
An employment tribunal will also make a basic award (based on the ex-employee’s age and length of service), equivalent to a statutory redundancy payment, which is a maximum of £21,000* (and changes annually). *figures for 2024-2025
There is a statutory maximum amount on compensatory awards for unfair dismissal, which is the lower of 12 months’ pay or £115,115*(and changes annually). This is based on the ex-employee’s losses after the deduction of income tax and National Insurance contributions to the date of the hearing and future losses (based on the length of time the employment tribunal decides it would take for the ex-employee to be in the same financial position that they were in before the dismissal. *figures for 2024-2025
In a successful claim of unfair dismissal, in addition to compensation, the ex-employee can request that the employment tribunal order reinstatement or re-engagement (ie the same job or similar job with the employer). If the employer fails to comply with such an order, an employment tribunal may make an additional award of between 26 and 52 weeks’ pay.
The employment tribunal will expect the ex-employee to have mitigated their loss. This means reducing the ex-employee’s financial loss (ie the steps taken to find alternative employment). This does not necessarily mean the same type of employment. At first, it may be reasonable for the ex-employee to look for jobs on a similar salary and in a similar area to their old job. However, as time goes by, the ex-employee will be expected to consider work, which may be less well paid, part-time or in a different area to the previous job.
The ex-employee must show that they have mitigated their loss and will be expected to provide the employment tribunal with evidence that they have claimed state benefits and kept all paperwork in support of finding new work (eg online adverts, copies of any applications for jobs and rejection letters).
An employment tribunal can reduce awards for unfair dismissal if:
The material contained in this web page is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.
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