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;  
• a statutory requirement (e.g. holding 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, it can still be a fair dismissal. 

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

• 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. 

The law also states that in taking into account the reason for dismissal, the employer must have acted reasonably. Guidelines established over the years by tribunals and higher courts have emphasised the need for employers to operate fair procedures. In particular, 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. 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, other sanction such as lost pay or suspension, or a disciplinary dismissal. 

Dismissed employees may complain to an employment tribunal if they have sufficient service. The majority of unfair dismissal claimants need at least two years’ service to be able to bring a claim. 

Certain employee resignations may be constructive dismissals. Two years’ service is also needed for most unfair dismissal claims that are based on constructive dismissal (resignation). 

Most automatically unfair dismissals do not require a qualifying period of service to have been completed. There are two exceptions: 

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