What is an unfair dismissal?

Unfair dismissals are terminations of employment by the employer, with or without notice of termination, where:  

• the reason for dismissal is not one of the statutory fair reasons; or 
• the reason for dismissal was for one of the statutory fair reasons, but the employer has acted unreasonably in deciding to dismiss for that reason.  

The employer must show that the reason, or main reason where there is more than one, relates to one or more of the following:  

• capability or qualifications; 
• conduct; 
• redundancy;  
• breach of a statutory requirement (such as loss of a driving licence).  

In addition, if the reason is not listed above, but there was some 'other substantial reason' of a kind capable of justifying the dismissal of someone in that position, this can be a fair reason for dismissal.  

Examples of substantial reasons that have been used by employers to justify a fair dismissal include:  

• refusal to accept changes to terms and conditions; 
• refusal to sign a restrictive covenant; 
• return of the original post-holder following a secondment; or 
• serious breakdown of trust and confidence.  

In every case, whether or not an employer’s reason is capable of justifying a fair dismissal depends on all the facts.  

Retirement is no longer a fair reason for dismissal.  

Once an employer has established that the reason for dismissal is one of these fair reasons, they must also show that they have acted reasonably in dismissing for that reason. Guidelines established over the years by tribunals and higher courts have emphasised the need for employers to operate fair procedures. A failure by either party to comply with the Acas Code of Practice on Discipline and Grievance Procedures (PDF) will be taken into account by an employment tribunal when considering overall fairness. However, the Acas Code does not apply to:  

• dismissals for redundancy; 
• dismissals due to the ending and non-renewal of a fixed-term contract; 
• dismissals where long-term ill-health means that the employee is no longer fit enough to perform their role; 
• dismissals for ‘some other substantial reason’.  

Even though the Acas Code does not apply in these situations, the employer must still act fairly and follow a fair procedure.  

The Acas Code applies to any dismissal where the employer is seeking to sanction (punish) an employee for misconduct or for failing to meet a standard of performance set by the employer. It applies to any internal process at work that can result in a warning or other sanction, such as loss of pay or suspension.  

Dismissed employees can bring a claim for unfair dismissal in an employment tribunal if they have sufficient length of service. The majority of unfair dismissal claimants currently need at least two years’ service to be able to bring a claim. This is set to change when the Employment Rights Bill is fully implemented.  

An employee can also bring a claim for unfair dismissal if they have been “constructively” dismissed, meaning that they have resigned in response to a fundamental breach of contract by their employer. The two years’ qualifying service also applies to these claims.  

Most automatically unfair dismissals do not require a minimum qualifying period of service. There are two exceptions:  

• automatically unfair dismissals relating to a business transfer; and 
• automatically unfair dismissals relating to a spent conviction.  

Before issuing a claim in the employment tribunal, the employee must go through the Acas Early Conciliation procedure.