Unfair Dismissal Claims (and Unfair Dismissal Compensation)

Since April 2012, an employee needs at least 2 years’ of continuous service in order to bring an unfair dismissal claim to an employer.

An unfair dismissal claim must be brought within three months, less a day, of the effective date of the employees termination. Please note if an appeal is not upheld against a dismissal, the termination date will remain as the original date of dismissal.

Potentially fair reasons for dismissal

It is possible for an employer to dismiss fairly for five core reasons:

1. Conduct
2. Capability
3. Redundancy
4. Illegality
5. “some other substantial reason”

How does the Employment Tribunal decide if the dismissal was unfair?

The Employment Tribunal will consider the following elements, also taking into account the size and nature of the employer themselves:

1. Reason for dismissal.
2. Whether the employer acted reasonably in all the circumstances.

The employer must show the reason for the dismissal, while the employee and employer must prove their cases in relation to whether a fair procedure was followed, taking into account all the circumstances involved.

Employees with less than 2 years’ service

If a dismissal is automatically unfair, an employee can bring a claim with less than 2 years’ service.

Examples of automatically unfair dismissals include: if a woman is dismissed because she is pregnant, if an employee is dismissed for trade union activities, or if they were dismissed for making a protected disclosure at work (“whistleblowing”).

How much compensation can be awarded for unfair dismissal claims?

If you win an unfair dismissal claim, the Employment Tribunal will then decide how much, if any, compensation to award based on a number of varying factors that differ case-to-case.

Unfair dismissal compensation includes two elements:

1. Basic award: calculated in the same way as a statutory redundancy payment, taking into account age, gross weekly pay (subject to a legal cap that is revised annually) and length of service. The online Government Statutory Redundancy Calculator uses the same calculation to work out your basic award.
2. Compensatory award: including net loss of earnings, pension, bonus/commission, other benefits and expenses incurred seeking new employment. It is important to keep full records of job searches and applications to support their claim for loss of earnings (the employee is under a duty to mitigate their loss).

There is a legal cap on the amount of the compensatory award (the figure is revised annually, and is the lower of the cap or 1 year’s salary), unless you were dismissed because of whistle blowing or health and safety reasons, in which case the award is unlimited.

Can unfair dismissal compensation be reduced?

Yes, the Employment Tribunal has the power to reduce the compensatory award, in cases or situations which can include the following:

1. If following a fair procedure would have led to the same outcome (“Polkey” reductions).
2. If an employee contributed to their dismissal.
3. Failure to comply with the ACAS Code of Practice, which applies to the employee and employer. For example, if the employee does not appeal a decision to dismiss or the employer does not offer the right of appeal. The compensatory award can be increased or decreased by up to 25%.

Steps to take before issuing an Employment Tribunal claim

Before bringing a claim in the Employment Tribunal or court, you could consider trying to negotiate a settlement agreement with your employer to avoid the need for proceedings and make things much easier for everyone.

Our unfair dismissal lawyers have a wealth of experience in successfully negotiating settlement agreements across a wide range of cases. Get in touch with one of our experienced employment lawyers to discuss your potential claim in more detail and get the advice and guidance you need today.