For your business

Unfair Dismissal

The prospect of facing an Employment Tribunal claim for Unfair Dismissal should not be taken lightly. In 2016/17 the median award for Unfair Dismissal was £7,521 and defending a claim takes up a great deal of management time not to mention legal costs. The 2 year qualification rule does not apply in cases of automatic Unfair Dismissal, such as for pregnancy or leave for family reasons, health and safety or whistleblowing. It is wise to seek legal advice before dismissing an employee in order to minimise risk of a claim.

We will always consider how the problem is affecting your business and your relationship with other employees: if staff know they are immune from sanction, this can affect morale and performance. Whilst our goal is to avoid litigation where possible, we do not advise defensively so as to handcuff your organisation - if a commercially sound solution incorporates some risk, we will advise you of the benefits and potential pitfalls before agreeing a way forward, which might include offering a Settlement Agreement.

If you do receive an Employment Tribunal claim for Unfair Dismissal or are contacted by ACAS in Early Conciliation, our wealth of experience in dealing with these claims means that we can assess the merits of defending or settling the claim and, if appropriate, assist you in presenting a robust defence.

It is usually possible to agree a fixed fee to give unbundled advice regarding the dismissal of an employee or an Employment Tribunal claim. Where you want us to give open ended advice or represent you in proceedings, we will provide the best estimate we can and keep you fully informed about the costs you are likely to incur. Advice about the merits or otherwise of dismissing employees is included in our retainer offering for employment matters.

Contact us on 020 7935 3522, lt@freemanssolicitors.net or using the contact form

FAQs about Unfair Dismissal

Who can claim Unfair Dismissal?

Any employees with 2 years’ service can claim Unfair Dismissal. Automatic Unfair Dismissal, such as because of pregnancy or leave for family reasons, health and safety or whistleblowing, has no qualifying period. Casual workers who are not employees cannot claim Unfair Dismissal, though they may argue that they are in fact employees if they are subject to sufficient control and mutuality of obligation. Apprentices and employees on fixed term contracts can claim Unfair Dismissal – the non-renewal of a fixed term contract is treated as a dismissal for these purposes.

Can an employee be dismissed without warning?

The ACAS Code suggests that employees should not be dismissed without prior warning except in cases of gross misconduct. Examples of gross misconduct should be contained in your Disciplinary Procedure. In an Unfair Dismissal claim, an Employment Tribunal would look at whether dismissal was within the “range of reasonable responses” to the employee’s misconduct.

Can an employee be dismissed without notice?

Dismissal without notice would be a breach of contract unless the employee has committed gross misconduct or payment is made in lieu of notice (where the Contract of Employment allows for this). The employee would have a claim for wrongful dismissal to be paid for the length of their notice period, whether or not they have 2 years’ service.

Can an employee be dismissed without following procedure?

Dismissal without following any form of procedure is likely to be found to be unfair (assuming the employee has 2 years’ service). However, the employee is likely to face deductions from Unfair Dismissal compensation if s/he is found to have contributed to the dismissal or the Employment Tribunal find that following a fair procedure would still have led to dismissal.

Can an employee claim Unfair Dismissal after redundancy?

An employee could claim Unfair Dismissal alleging either that there was not a genuine redundancy or that the selection for redundancy was unfair. It is important not to make a role redundant or select an employee for redundancy when the real reason for terminating their employment is something else. Whilst it might be considered less contentious, it can in fact store up problems for later. Consider instead a Disciplinary or Capability Procedure, or holding a protected conversation.

How long does an Unfair Dismissal claim take?

We usually estimate that the average Unfair Dismissal claim is heard around 6 months after it is issued. Much will depend on the complexity and number of witnesses: the Employment Tribunal struggles to accommodate longer hearings, which will be listed further into the future than short hearings. Our experience is that the Employment Tribunal Service is currently overstretched, with an increase in claims following the decision to quash Employment Tribunal fees, and that this is leading to delays in listing hearings.

How is Unfair Dismissal compensation calculated?

Unfair Dismissal compensation is made up of:

  • A Basic Award, calculated in the same way as a statutory redundancy payment
  • A Compensatory Award, which compensates the employee for any financial loss. This is usually loss of earnings but might also include the costs of looking for work or setting up a new business. A payment is also made for loss of statutory rights. There is a statutory cap on the Compensatory Award of one year’s salary or £83,682, whichever is lower (except in health and safety or whistleblowing cases).

Are Unfair Dismissal awards taxable?

The first £30,000 of any compensation for loss of employment is tax free. However, a change in the law means that for anyone dismissed on or after 6 April 2018, any payments in respect of the notice period will be subject to tax and national insurance.

This means that most Unfair Dismissal compensation is not taxed, which can be a valuable factor in settlement negotiations.