Unfair Dismissal in UK Employment Law

Introduction

Unfair dismissal is a statutory right under Part X of the Employment Rights Act 1996 (ERA 1996), protecting employees from being dismissed unfairly by their employer. The right to claim unfair dismissal is one of the most important protections in UK employment law, providing a remedy for employees who are dismissed without good reason or without a fair procedure. The claim is brought in the Employment Tribunal, which may award compensation, reinstatement, or re-engagement.

Qualifying Period

The right to claim unfair dismissal is subject to a qualifying period of continuous employment. Under section 108 of the ERA 1996, an employee must have been continuously employed for a minimum period before they can bring a claim. The qualifying period was historically two years but has been subject to change.

There is no qualifying period for automatically unfair dismissals, which include dismissals for: a reason relating to pregnancy, childbirth, or maternity; family leave (including paternity, adoption, and parental leave); making a protected disclosure (whistleblowing); asserting a statutory right; trade union membership or activities; or jury service.

The Burden of Proof

The burden of proof in an unfair dismissal claim operates in two stages. The employer must prove the reason for dismissal and that it falls within one of the five potentially fair reasons set out in section 98 of the ERA 1996. If the employer satisfies this burden, the Employment Tribunal must determine whether the dismissal was fair or unfair in all the circumstances, having regard to the employer’s conduct and the size and administrative resources of the employer’s undertaking.

Potentially Fair Reasons

Section 98(2) of the ERA 1996 sets out five potentially fair reasons for dismissal:

Capability or qualifications — the employee’s capability or qualifications for performing the work of the kind they were employed to do. Capability includes skill, aptitude, health, and any other physical or mental quality.

Conduct — the employee’s conduct, including misconduct, gross misconduct, and behaviour outside work that affects the employment relationship.

Redundancy — dismissal by reason of redundancy, as defined by section 139 of the ERA 1996.

Statutory restriction — the employee could not continue to work in the position without contravention of a duty or restriction imposed by or under an enactment.

Some other substantial reason (SOSR) — a residual category covering reasons that do not fall within the other four categories but are nonetheless substantial enough to justify dismissal.

Reasonableness

The central question in any unfair dismissal case is whether the employer acted reasonably in treating the reason as a sufficient ground for dismissal. Section 98(4) requires the tribunal to consider whether, in the circumstances (including the size and administrative resources of the employer’s undertaking), the employer acted reasonably or unreasonably in treating the reason as sufficient for dismissing the employee, and to determine that question in accordance with equity and the substantial merits of the case.

The range of reasonable responses test requires the tribunal to consider whether the employer’s decision fell within the range of responses that a reasonable employer might have adopted. The tribunal must not substitute its own judgment for that of the employer. In Iceland Frozen Foods Ltd v Jones (1983), the Employment Appeal Tribunal held that the tribunal must consider whether the employer’s decision was within the range of responses that a reasonable employer might have adopted.

The Burchell test (from British Home Stores v Burchell (1980)) applies to conduct dismissals: the employer must have a genuine belief in the employee’s guilt, based on reasonable grounds, after carrying out as much investigation as was reasonable in the circumstances.

Procedural Fairness

The ACAS Code of Practice on Disciplinary and Grievance Procedures sets out the procedural standards that employers should follow. The Code requires employers to: carry out a reasonable investigation; inform the employee of the allegations; hold a disciplinary hearing; allow the employee to be accompanied; communicate the decision; and provide a right of appeal.

A failure to follow the ACAS Code does not render a dismissal automatically unfair but may increase any compensation award by up to 25 per cent. A failure by the employee to comply with the Code may reduce compensation by up to 25 per cent.

Remedies

If the tribunal finds that an employee has been unfairly dismissed, it may make an order for: reinstatement (the employee returns to the same job); re-engagement (the employee returns to a comparable job with the same employer); or compensation.

Compensation for unfair dismissal consists of two elements: a basic award (calculated by reference to the employee’s age, length of service, and weekly pay, subject to a statutory cap); and a compensatory award (intended to compensate the employee for the financial loss suffered as a result of the dismissal, subject to a statutory cap).

Conclusion

Unfair dismissal law under the Employment Rights Act 1996 provides employees with protection against arbitrary and unjustified dismissal. The requirement for a qualifying period, the five potentially fair reasons, the range of reasonable responses test, and the procedural requirements ensure that employees are dismissed only where there is a genuine reason and a fair process.