Unfair dismissal is one of the longest-established areas of employment law, familiar to employers and employees alike. In interpreting and developing unfair dismissal law over the years, employment tribunals have highlighted the importance of companies following fair procedures before deciding to dismiss an employee. This section of the Guide explains the rules on unfair dismissal. Most unfair dismissal law is in the Employment Rights Act 1996, but unfair dismissals on trade union grounds are dealt with in the Trade Union and Labour Relations (Consolidation) Act 1992.
This section begins by setting out who is eligible to claim unfair dismissal ( Eligibility to claim unfair dismissal ) and then goes on to look at the legal principles that govern whether a particular dismissal was fair or unfair. It is up to the employee to prove that he or she was dismissed. Dismissal is defined in a particular way for the purposes of unfair dismissal law (establishing the dismissal) and includes, for example, a decision not to renew a fixed-term contract. It is then usually for the employer to prove the reason for the employee's dismissal.
Dismissals for certain reasons are automatically unfair (automatically unfair reasons for dismissal ). If the reason does not fall within one of these inadmissible categories, it must fit into one of the other categories of potentially fair reasons for dismissal recognised by the legislation. These categories are defined broadly, however, and are capable of covering all legitimate business reasons for dismissing an employee (potentially fair reasons for dismissal ).
Retirement
The law about compulsory retirement of employees by employers has changed and guidance about how to handle these issues and avoid unfair dismissal and age discrimination claims is set out below in this Guide (retirement).
Once the company has established that it had a potentially fair reason for dismissing, the crucial issue is whether the company acted reasonably in treating it as a sufficient reason to dismiss the employee. Employment tribunals have definite views on what is involved in handling a dismissal reasonably, and this chapter draws on the tribunals' decisions in order to give guidance on handling different types of dismissal (did the company act reasonably?).
The ACAS Code of Practice on disciplinary and grievance procedures will be taken into account by employment tribunals, where relevant, when hearing unfair dismissal cases. The Code sets out the key elements in handling fairly disciplinary and grievance issues. The Code is important not only when the tribunal decides on liability (particularly whether the employer has acted reasonably) but also when deciding on unfair dismissal compensation which can be adjusted by up to 25% for unreasonable failure by either party to comply with any provision of the Code.
Separate sections of this Guide deal in more detail with how unfair dismissal law affects the handling of specific types of cases, such as poor attendance, sickness absence and unsatisfactory performance ( Managing performance ), discipline ( Discipline ) and redundancy (redundancy). The legal mechanics of how an employment contract is terminated and other legal issues that arise when an employment relationship ends, such as the obligation to provide employees with written reasons for dismissal, can also be found elsewhere in this Guide (terminating employment).
It is also important to keep in mind that unfair dismissal law is not the only route by which a dismissal can be challenged as unlawful.
A dismissal that is implemented in a way that breaches the terms of an employee's contract is a wrongful dismissal, for which the employee can recover compensation (see wrongful dismissal ). A dismissal may amount to unlawful discrimination if it is on grounds of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex or sexual orientation (known in the Equality Act 2010 as protected characteristics).
The Equality and human rights commission (EHRC) Code of practice on employment explains how to avoid discrimination in decisions to dismiss and in procedures for dismissal. In respect of capability and conduct dismissals, the Code says that in order to avoid discrimination employers should in particular
- apply their procedures for managing capability and conduct fairly and consistently
- ensure that the decision to dismiss is made by more than one individual, and on the advice of the human resources department (if the employer has one)
- keep written records of decisions and reasons to dismiss
- monitor all dismissals by reference to protected characteristics
- encourage leavers to give feedback about their employment; this information could contribute to the monitoring process.
The law on discrimination is summarised elsewhere in the Guide ( equal opportunities ). The issue of age discrimination, unfair dismissal and retirement are dealt with later in this section.
Related links
acas: code of practice
Business link: dismissals