Unfair Dismissal

Last updated: 13th May 2021

Your comprehensive guide to pursuing an unfair dismissal claim at the Employment Tribunal

If you have chanced upon this page, you have probably been dismissed and want to know whether your dismissal was unfair. If it was, you may have grounds to bring a claim and could be awarded unfair dismissal compensation.

In this comprehensive guide to unfair dismissal UK law, we will tell you everything you need to know about the subject. What is unfair dismissal? Are you eligible to claim? What are the time limits? What do you need to prove? How do you win? And what unfair dismissal compensation can you expect to receive if you do? And we will give you some examples of viable unfair dismissal cases.

We appreciate how stressful it can be finding yourself either dismissed, or with the threat of dismissal hanging over you, so the following has been put together to help you make an informed choice on your next steps.

Firstly, in order to be fair, your dismissal must have been because of one (or more) of the 5 fair reasons for dismissal, which are:

  • conduct;
  • capability (including performance and ill health);
  • redundancy;
  • illegality (or contravention of a duty or restriction imposed by or under an enactment (more on this below) or;
  • the catch all reason, some other substantial reason (or SOSR)

Secondly, if your employer is able to establish that you were dismissed for one of these 5 reasons, it must then be established that the dismissal itself was fair, taking into account a number of factors, including the general equity (or fairness) of the case.

The Law

The law relating to unfair dismissal is set out in s.98(4) of the Employment Rights Act 1996

… the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer):

depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee

shall be determined in accordance with equity and the substantial merits of the case”.

What this means is that employment tribunals have quite a wide discretion to assess the fairness of your dismissal, even if your employer is able to establish that they are relying on one of the 5 fair reasons for dismissal. 

What are the 5 fair reasons for dismissal?

Your employment can be fairly brought to and end for one (or more – but normally only one!) of the following reasons, some of which you should be familiar with:

  1. Conduct (or more correctly, misconduct);
  2. Capability (this covers performance and also ill health);
  3. Redundancy;
  4. Illegality (ie it would break the law to continue to to employ you); or
  5. Some other substantial reason. (SOSR)

CONDUCT

Of course, it is perfectly fair for employers to dismiss for misconduct. 

Misconduct dismissals tend to fall into two categories:

  1. misconduct and;
  2. gross misconduct. 

In normal misconduct cases, you would not normally be dismissed for a first offence.  Before dismissing you, your employer would be expected to go through a series of warnings for each act of misconduct – normally, a first and final warning before dismissal for repeated misconduct. 

Occasionally, if the misconduct is too serious for a first written warning but not serious enough to dismiss, your employer may go straight to a final written warning. 

Gross Misconduct

If your employer finds that you have committed an act of gross misconduct, then they are normally entitled to dismiss you summarily and without notice. 

Examples of gross misconduct in the workplace, include:

  • fighting;
  • bullying and intimidation;
  • insubordination;
  • breach of health and safety rules;
  • being under the influence of alcohol or drugs at work;
  • dishonesty;
  • theft;
  • fraud;
  • bringing your employer’s reputation into dispute;
  • a breach of your employers social media policy;
  • disloyalty etc. 
Gross Misconduct List

However, as with all dismissals, before dismissing you, your employer must ensure that they take you through a fair dismissal process. 

There is no definition of what constitutes a fair procedure, but your employer would be wise to adopt a procedure similar to that recommended by the Advisory, Conciliation and Arbitration Service (ACAS)

This would normally involve:

  • carrying out a fair investigation into your misconduct;
  • sharing the evidence with you (for example, showing you witness statements from colleagues, cctv evidence or other documentary evidence that they are relying upon) and;
  • inviting you to a disciplinary hearing (and allowing you to bring a colleague with you) at which you can defend yourself.

They should also give you the right to appeal their decision afterwards. 

If they don’t follow a fair procedure, this will likely mean that your dismissal is unfair. Or, if they follow a fair procedure which proves you innocent (but they dismiss you anyway) again your dismissal is likely to be unfair. 

The legal test which the employment tribunal will apply is called the ‘range of reasonable responses‘ test.

What this means is that, if the tribunal concludes that, taking into account all the circumstances of the case (including the procedure followed by your employer) your dismissal was not a decision that a hypothetical reasonable employer could have reached, then they will rule that you were unfairly dismissed. 

CAPABILITY

If your employer feels that you are not doing your job correctly or are performing lower than to their expected standards, they can dismiss you. 

Furthermore, if your employer concludes that you are not fit to do your job due to illness, then they can also dismiss you.

For example, if you have had a lot of time off work due to an injury which prevents you from working, your employer may be justified in dismissing you. 

Again, before dismissing you for incapability, your employer should carry out a fair process. 

If they believe you are underperforming, your employer would normally advise you, informally at first, as to what improvements they expect of you. 

If things didn’t improve they may invite you to a series of disciplinary meetings and give you first and final warnings for poor performance before dismissing you.

Performance Dismissals

Alternatively, they may ask you participate in a performance improvement plan (a PIP). 

In any event, your employer would be expected to provide you with support and training to help you meet the level of performance they want of you. 

They should also give you a realistic timescale for improvement and set clear and achievable targets for you to meet.

If your employer dismisses you for poor performance without following a fair process, your dismissal is likely to be unfair. As with misconduct dismissals, the ‘range of reasonable responses‘ legal test will apply.

In other words, if the procedure followed by the employer was flawed or the decision to dismiss unjustifiable, then the dismissal will be unfair.

Ill Health Dismissals

The same applies with ill health dismissals – a fair procedure should be followed before dismissal. 

In such cases, as a minimum, your employer should obtain details of your illness or injury and how long it is likely to keep you away from work. 

This information can be sought from your GP or medical team, but typically, your employer will approach an occupational health advisor who will be asked to produce a report. 

If your doctor or the OH report back that there is little that can be done to get you back to work in the short to medium term then your employer may be able to justify dismissing you, subject to careful consideration as to whether you may be disabled under the Equality Act 2010, in which case further obligations apply. 

REDUNDANCY

Your employer is able to dismiss you if your position is redundant. 

Broadly speaking, there are two ways to prove an unfair redundancy.

Firstly, your redundancy dismissal will be unfair if you are able to prove that your role is not redundant, in other words that the redundancy is a sham. 

The Law

Redundancy is defined by s.139 of the Employment Rights Act 1996

A genuine redundancy situation arises whether there is a diminution or cessation in your employer’s need for employees to carry out work of a particular kind. 

If you can prove that the role still needs to be done, then this should help you prove unfair redundancy. 

Evidence of this may be that your employer has hired someone else to do the role, or they have advertised the role shortly after you have been dismissed. Or possibly, they have changed the job title, but the role and responsibilities remain the same (it is often useful to compare job descriptions to prove this). 

Unfair Redundancy

Secondly, your employer is required to take you through a proper redundancy procedure before dismissing you. If they don’t, then again, this may result in an unfair redundancy. 

Normally, your employer would need to:

  • give you early warning of your risk of redundancy;
  • consider whether to put you in a pool of other colleagues at risk of redundancy;
  • apply a fair selection criteria (to all those in the pool vying for available positions);
  • engage in meaningful consultation with you;
  • consider you for suitable alternative employment and;
  • if you are dismissed, offer you the right to appeal against your dismissal. 

Case law relating to fairness in redundancy situations can be seen in

Williams and Others v Compair Maxam Ltd


See our page on your Redundancy Rights to find out more

ILLEGALITY

This reason for dismissal is very rarely used, but in summary, it covers a situation where it would be illegal for your employer to continue to employ you. 

For example, if you are employed as a lorry driver and lose your driving licence, then your employer would probably be justified in dismissing you (if they couldn't find alternative non-driving work for you) as it would of course be illegal for them to continue to employ you as a driver. 

As with the other fair reasons, your employer would still need to take you through a fair procedure before dismissing you. They should certainly call a meeting and give you the chance to argue your case against dismissal. 

SOME OTHER SUBSTANTIAL REASON (SOSR)

This catch all provision allows employers to dismiss fairly, when the reason for dismissal does not fall into one of the other 4 reasons. 

It is used in a number of different circumstances – from:

  • when there has been an irretrievable breakdown in the relationship between you and your employer;
  • when you are unwilling to agree to changes to your employment contract;
  • or when a third party (for whom you are contracted to work) does not want to work with you any longer. 

This is a non-exhaustive list of course, and SOSR can be used for many reasons. 

However, as with all dismissals, your employer is required to take you through a fair dismissal procedure, otherwise they leave themselves at risk of an unfair dismissal claim. 

In conclusion, if you have been dismissed for any reason other than one of the five reasons, your dismissal will be unfair. 

What qualifies as unfair dismissal?

Well, as outlined above, a dismissal will be unfair if your employer has failed to follow a fair procedure, or if the dismissal is, in all the circumstances of the case, unreasonable. 

Established case law allows tribunals a reasonably wide discretion to rule that a dismissal is unfair. 

In practice, the tribunal judge will listen to the evidence submitted by both you and your employer and will make a decision as to whether the dismissal was within the ‘band’ or ‘range’ of options available to the employer. 

Conversely, this means that, even if the dismissal seems harsh, as long as the judge forms a view that, on balance, the decision to dismiss could be within the range of responses available to a hypothetical reasonable employer, they can rule that the dismissal was fair. 

Tom’s Tip

Evidence of poor procedure, bias, or perverse decision making by your employer will certainly help an Employment Tribunal judge conclude that your dismissal was unfair.

What is a fair dismissal procedure?

There is no definition of a fair dismissal procedure. 

Your employer is simply expected to implement a fair one, that can stand up to scrutiny at tribunal. 

The procedure your employer will follow largely depends upon the reason you are being dismissed. 

Misconduct Dismissal Procedure

If you are being disciplined for misconduct your employer would be expected to:

  1. Suspend you on full pay (gross misconduct cases only);
  2. Carry out an impartial and even handed investigation (including holding an investigation meeting with you and possibly your colleagues);
  3. After the investigation, if there is a case to answer, invite you to a disciplinary hearing with enough time to prepare for it and, before it takes place, let you have details of the allegations against you with copies of relevant evidence; 
  4. Hold an unbiased disciplinary hearing, not chaired by the person who oversaw the investigation, and allow you to have a witness present; 
  5. Allow you to appeal the decision/sanction/dismissal. 

Capability Dismissal Procedure 

If you are being dismissed for capability, your employer has two options:

  1. It can either implement a capability procedure whereby they would advise you on the areas in which you are underperforming and invite you to a number of meetings to discuss this, and give you a series of warnings if you didn’t improve, before ultimately dismissing you. 
  2. Or alternatively, they may ask you to participate in a performance improvement plan (or a PIP).

These procedures may be set out within your company handbook.

Whichever method your employer chooses, they should do all they can to support you to improve your performance.

For example, they should seek to understand why there are performance issues and should offer training and other guidance to help you reach the standards the expect. 

And if they want to monitor your performance they should set reasonable targets for you to achieve within a specific timeframe, so both you and your employer know what the parameters are (in order to work together) to resolve the performance issue. 

However, if they don’t give you any support; or simply go through the motions, and dismiss you even if you meet their targets; or if they move the goalposts; or conversely, if they set you unachievable targets – these are indicators of unfairness. 

Ill Health Dismissal Procedure 

If your employer is considering dismissing you for ill health, your employer should:

  • Obtain medical evidence (either from your doctor, or from occupational health) in order to find out what the medical problem is and when you are likely to be able to return to work.
  • Once this medical evidence is in place, they should then invite you to a meeting, informing you beforehand that your dismissal could be an outcome. 
  • At the meeting, at which you should be accompanied, and your employer should allow you to argue your case as to why you should not be dismissed. 
  • If, however, they proceed to dismiss you, they should offer you the right to appeal.  
  • If your employer dismisses you without obtaining medical evidence or without giving you the chance to make representations, your dismissal is likely to be considered unfair by an employment tribunal

Redundancy Dismissal Procedure 

With regard to fairness in redundancy situations there are several key steps that your employer should follow. 

These are summarised below and can be found in more detail in the leading case of Williams and Others v Compair Maxam [link]

  • Early Warning – give reasonable advance warning that you are at risk of redundancy; 
  • Consultation – carry out a series of meaningful individual consultation meetings with you, to discuss how your redundancy could be avoided; and to consult with your union if you have one;
  • Pool – consider whether you should be put in a pool of at risk employees, or whether you are in a pool of 1 (ie on your own);
  • Fair Criteria – decide upon a fair selection criteria (objective rather than subjective) and apply it (in a fair manner) to all employees within the pool;
  • Suitable Alternative Roles – Consider whether there are any suitable alternative roles that you could be redeployed to; 
  • Appeal – Allow you to appeal the dismissal. 

Illegality Dismissal Procedure 

In these cases, your employer would be expected to:

  • Consider whether there were any other roles within the organisation that you could be redeployed to; 
  • If not, give you information as to why it believes it can no longer employ you due to illegality/breach of statutory right; 
  • Invite you to a meeting to discuss its reasoning and to allow you to defend yourself, pre-warning you that your dismissal was a possible outcome at the meeting;
  • Allow you to appeal the dismissal. 

SOSR Dismissal Procedure 

Again, transparency is key to a fair SOSR dismissal. 

Your employer would be expected to:

  • Write to you to explain why the were considering dismissing you on the basis of SOSR – ie they would set out the reason behind the proposed dismissal and provide you with evidence (for example, if your employer was considering dismissing you because a client who you were contracted to work for no longer wanted you on their premises (third party pressure), they would provide you with details of the client’s complaints about you. 
  • Invite you to a meeting to discuss the reason that they were considering dismissing you in order that you can defend yourself, pre-warning you that your dismissal was a possible outcome at the meeting;
  • Allow you to appeal the dismissal. 

In conclusion, whatever the reason for your dismissal, your employer must go through a fair and documented procedure allowing you to make representations, prior to dismissing you. 

How many warnings do you get before you get sacked?

Warnings would only relate to dismissals which are conduct or capability related.

If a dismissal is conduct related, an employer can dismiss an employee without giving them any warnings whatsoever, that is, if they follow the correct procedure.

Disciplinary Warnings

How long do you need to be employed to bring an unfair dismissal claim?

2 years normally. 

If you have been employed for less than 2 years, then unless one of the exceptions applies (see below) then the employment tribunal would not have jurisdiction (authority) to deal with your claim and it would be struck out automatically. 

2 years runs from the date your employment began (normally your first day at work) until the date of termination, or in legal terms the effective date of termination (or the EDT). 

The EDT is normally easy to work out. For example, where you are dismissed and allowed to work your notice period, your EDT will normally be your last day at work. 

Or if you are dismissed, but put on garden leave, you EDT will be the last day of your garden leave period. 

Length of Service - Effective Date of Termination

If you are dismissed summarily (gross misconduct) your EDT will be the day upon which your dismissal is communicated to you. It could be at the disciplinary hearing itself, or it could be the date upon which the dismissal letter or email is read by you – so there can be some uncertainty. 

Are there any exceptions to the two year rule?

Yes there are a few exceptions.

Whistleblowing

Firstly, if you are dismissed because you have made a protected disclosure (also known as whistleblowing) then you don’t need two years service, as such dismissals are automatically unfair. 

In other words, if you have been dismissed because you have highlighted wrongdoing or illegal activity on the part of your employer, you may be able to bring an unfair dismissal claim.   

The Law

Under section 103A:

“An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee made a protected disclosure.”

The normal two year rule is dis-applied by s.108(1)(3) of the Employment Rights Act

Health & Safety

Secondly, you don’t need more than two years employment if you were dismissed because:

  1. you brought a health and safety risk to the attention of your employers; or
  2. because you left work or refused to return to work because you were concerned about health and safety; or
  3. because you took steps to protect yourself or others from a risk to your health and safety. 

If you were dismissed for any of these three health and safety related reasons, you can bring an unfair dismissal claim. 

The Law

See section 100 of the Employment Rights Act 1996.

Again the normal two year rule is dis-applied by s.108 of the same Act.

Protected Characteristic

It is worth noting that if you are dismissed due to a protected characteristic (for example, your race, pregnancy, or age) you won’t need 2 years service to seek unfair dismissal compensation.

In such circumstances you would need to advance a discrimination claim, rather than one of unfair dismissal. As part of this however, you would be entitled to seek damages for loss of earnings.

Other main examples: 

You don’t need two years if:

  • If you are dismissed for taking jury service; 
  • If you are dismissed for a reason connected to pregnancy, maternity or time off relating family leave (maternity, paternity, shared parental leave etc) of if you are dismissed for taking time off to deal with a family emergency. As covered by s.57A Employment Rights Act 1996
  • If you are dismissed (in certain circumstances) for refusing to work in a shop or betting shop on a Sunday; 
  • If you are dismissed for refusing to work hours in excess of those imposed by the Working Time Regulations 1998; 
  • If you are dismissed for being an employee representative; 
  • You were dismissed for asking to paid minimum wage. 
  • You were dismissed for making an application for flexible working.

Finally, you don’t need two years service if you were dismissed for asserting a statutory right.

What does asserting a statutory right mean? 

Well, this is a bit of a catch all exception, but generally speaking, if you are dismissed for asserting a statutory employment right that can be enforced at an employment tribunal.

For example your right to an employment contract or the right not to have unlawful deductions made from your wages (which preferably you should draw attention to in writing) - you can make a claim for unfair dismissal, even if you don't have two years service. You can even rely on this right if the assertion that you made is incorrect, as long as you asserted your rights in good faith. 

What is automatic unfair dismissal?

As stated above, an automatic unfair dismissal is when an employer sacks you for any of the following reasons. In these instances, it does not matter what your length of service (qualifying period) with your employer is.

These include, dismissal because you:

  • are pregnant or are not at work and on maternity leave
  • have requested that your legal rights are to be met (such as, the right to receive the minimum wage)
  • have reported wrongdoing by your employer (for example, you are acting as a whistleblower)
  • are a member of a trade union and participated in official industrial action, or were acting as an employee representative
  • reported your employer over a health and safety issue
  • are involved regarding certain business transfers (such as TUPE, Transfer of Undertakings – Protection of Employment – if your employer has sold the company you work for).
Automatic Unfair Dismissal

Find out more with our guide to automatic unfair dismissals.

Further, if your employer doesn’t follow the relevant disciplinary or dismissal processes when you are sacked, then they can be held liable and you could advance a case for unfair dismissal at employment tribunal.

What to do if you’ve been unfairly dismissed?

You may initially want to take advice from a solicitor, your union (if you are a member), from a law centre or the Citizens Advice Bureau

If your advisor confirms that you may have been unfairly dismissed, then you should start the process of bringing a claim at tribunal.

But make sure you act quickly, as there are very strict time limits in employment tribunal claims – you have three months from the date of dismissal (not the date of the appeal) to start the legal process. 

Find out if we can help you today

What are unfair dismissal settlement agreements?

Where you have a viable unfair dismissal case, your employer might prefer to offer you a pre-action settlement agreement, rather than taking part in a potentially costly and time consuming tribunal trial.

You can either approach your employer directly, on a ‘without prejudice’ basis or you can ask a representative to do this for you. 

Tribunal Claim’s highly skilled employment solicitors have many years of experience in successfully negotiating pre-action settlement packages on behalf of our clients. We can also do so on a no-win-no-fee basis, meaning that you only pay us if we are successful in negotiating you a financial settlement.

Negotiating Pre-Action Settlement Packages

We have year’s of experience successfully negotiating financial settlements for employees like you! Our no win no fee solicitors will act in your best interests to get you the best deal. You only pay us when we are successful and we recover our fee from the settlement, so you are never left out of pocket. So, call us today.

0800 7566605

Settlement agreements may be used in a variety of circumstances and our essential guide to your Settlement Agreement and getting the right deal gives you 25 valuable tips.

One of the most important things to remember is that if you are approached by your employer and asked to sign a settlement agreement, you will need a solicitor.

The costs for this will be met by your employer!

For such an agreement to be legally binding, you will need to take ‘mandatory’ legal advice to fully understand it’s implications and to ensure you are receiving the correct level of compensation being offered.

Are there any time limits?

Yes, there are very strict time limits to commence unfair dismissal proceedings. 

The time limit is three months (less one day) from the date of your dismissal. 

Time Limits Employment Tribunal

So, for example, if you were dismissed on 15 February 2021, you must start the employment tribunal process by 14 May 2021. If you don’t, you will be out of time and tribunals can only extend time in very limited circumstances

Having said this, it is important to note that the three month time limit is paused by registering your case with ACAS early conciliation, which you have to do in order to then bring a claim at the tribunal.

Once the ACAS early conciliation process has concluded, they will issue a certificate and you can use the certificate number to issue an employment tribunal claim. Most people issue their claims online

Use our time limits calculator to find out when your limitation date when submitting to Tribunal.

How do you win an unfair dismissal case?

Well, as long as you qualify, you have to prove that your dismissal was unfair – either by establishing that the procedure that your employer followed was flawed (procedural unfairness) or that the decision they reached was unreasonable in all the circumstances of the case (substantive unfairness)

The legal thresholds that you have to overcome are set out in more detail above. 

And of course, it helps to have a good lawyer assisting you with the process (but we would say that wouldn’t we?)

In all seriousness, you do not necessarily need a solicitor, but you may find it beneficial to have one on your side, as the tribunal process can be complex, stressful and time consuming.  

Some examples of viable unfair dismissal cases

Example 1

Instant Dismissal

You have been employed for 3 years.

You have an argument with your line manager and in the heat of the moment they tell you to “Pack up your stuff and leave. You are finished here!”

It would be reasonable for you to interpret those words as a dismissal. Because your employer has sacked you on the spot, without any fair procedure, your termination of employment is likely to be ruled as unfair and you could expect be awarded compensation at Employment tribunal.


Example 2

Gross Misconduct

You have been employed as a driver for 15 years.

You were involved in a minor accident where the company vehicle you were driving was damaged.

Following a disciplinary hearing your employer dismisses you for damaging company property. They claim that your actions constituted gross misconduct.

This is likely to be found to be unfair on the basis that your dismissal fell outside the ‘range’ of responses available to your employer.


Example 3

Redundancy (senior employee)

You have been employed for 7 years.

Your employer calls you into their office and advises you that sadly, due to a downturn in business, your job is redundant.

Prior to wishing you well, they say you can expect to receive holiday pay, notice pay and statutory redundancy.

This is likely to be found as a case of unfair dismissal on the basis that your employer failed to consult with you at all regarding your redundancy.


Example 4

Redundancy (junior employee)

You are employed as a junior accountant.

Your employer advises you that your role is being made redundant. During the redundancy process you discover that your employer is advertising externally for an accountant.

Comparing the job description you find it to be largely the same as yours, but are still made redundant.

The tribunal is likely to rule in your favour for 2 reasons.

  1. You may be able to prove your role was not redundant in the first place
  2. Your employer failed to offer you suitable alternative employment

Example 5

Ill Health

You have been employed for 4 years.

Unfortunately, you have needed to take quite a bit of time off work due to ill health.

Your employer calls you into a meeting and advises you that your employment is being terminated due to absence from work. However, they did not obtain any medical evidence in order to understand why this time off may have been necessary.

This is likely to be found as a case of unfair dismissal because your employer did not carry out a reasonable procedure prior to terminating your employment.


How long does an unfair dismissal case take?

From 6 months to a year.

The tribunal system is under pressure at the moment (early 2021) and because of this, it is taking longer than normal for cases to be heard. 

However, many cases can be settled at an earlier stage. 

What is the average payout for unfair dismissal UK?

According to recent tribunal statistics, the average unfair dismissal award is in the region of £10,000. 

The average settlement (out of court settlement) is around £6,000-£7,000. 

How is unfair dismissal compensation calculated?

The amount that you can claim depends on a number of factors, but broadly depends upon

  1. how long you have worked there;
  2. your age at dismissal and;
  3. how much you were paid. 

If you are dismissed unfairly from your job a compensation claim can be made under two categories:

  1. a basic award and;
  2. a compensatory award.

Use our Compensation Calculator to see how much you may be able to claim.

The Basic Award

This is a fixed sum which is calculated using the same statutory formula as statutory redundancy pay. 

The basic award is dependent on the duration that you have worked for your employer, your age at the time of dismissal and the value of your weekly pay before deductions of National Insurance and income tax.

If you have been employed for at least two years, you basic award is calculated as follows:

  • You receive half a weeks’ pay for each year you were employed below the age of 22;
  • You receive a weeks’ pay for every year of employment when you were aged between 22 and 40;
  • And you received one and a half weeks’ pay for each year of employment when you were 41 or older.

A weeks’ pay is capped at the maximum sum of £544.00 (as of 6 April 2021), therefore may not represent an actual weeks’ pay if you are paid more than this.

The maximum basic award for unfair dismissal claims is also capped at the equivalent of 30 weeks pay, totalling £16,320 (as at 6 April 2021).

The Compensatory Award

This award is often higher than the basic award. 

Employment tribunal judges have the right to award a sum which they consider to be just and equitable: 

The Law

S.123 of the Employment Rights Act 1996 states as follows:

“the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer”.

In reality, the amount that you are awarded often depends upon how long you have been out of work until you secure alternative employment at the same salary/wage. 

The tribunal also has the right to include your employee benefits and pension contributions into the compensatory award. 

Furthermore, there is a general duty to mitigate your loss. What this means is that an employment tribunal judge will want to see evidence that you have been actively looking for alternative work. If you haven’t, they may not consider it ‘just and equitable’ to award you a significant compensatory award. 

What is the maximum payout?

In April 2019, compensatory awards were capped. The current cap is £89,493.00 (as of 6 April 2021) so even if your gross annual salary is more, this is the maximum you can claim as a compensatory award. However, if your income is less than this sum, the maximum you can expect to receive is one year’s gross pay.

So for example, if your gross pay was £25,500 per annum, this would be the maximum amount that the tribunal can award to you as a compensatory award. 

Important Note: In other types of claims (for instance health and safety or whistleblowing claims) the compensatory award can be higher as the statuary cap only applies to standard unfair dismissal claims. There is also no limit on the level of compensation that can be awarded in discrimination claims. 

Do you pay tax on unfair dismissal compensation?

Not on awards less than £30,000.00 as unfair dismissal awards are considered as ‘compensation for loss of office’ and as such can paid on a tax free basis up to this sum. 

However, it is worth noting that any awards made in respect of notice pay will be subject to tax and national insurance in the normal way. 

What is the difference between unfair and constructive dismissal?

Very simply, unfair dismissal claims are brought when you have been dismissed and constructive dismissals are when you have resigned, because of your employers conduct towards you. 

One of the key differences between these two types of claim is that in unfair dismissal claims (once your employer has proved that you were dismissed for one of the 5 fair reasons) the burden of proving unfairness is neutral, ie neither party has the burden of proving it. 

However, in constructive dismissal claims, the burden of proving that your employer has committed serious misconduct falls on you. 

In other words, it is more difficult for you to to win a constructive dismissal claim than an unfair dismissal claim, because the burden of proof is more onerous. 

What is wrongful dismissal?

Wrongful dismissal claims can be brought when your employer has dismissed you in breach of your employment contract. 

For example, if you have been dismissed without being allowed to work your notice period or without being paid notice pay, this would normally be a clear breach of the notice clause within your written employment contract - making your dismissal wrongful. 

Wrongful dismissal claims can also be brought if you have been dismissed without your employer going through a disciplinary or capability procedure, but only if this right is specified in the written employment contract. 

However, wrongful dismissals tend to be quite limited in value – and whilst an employment tribunal judge can award what they consider to be just and equitable for such a claim, they tend to be limited in value to the amount of notice pay that you are entitled to under your employment contract. 

Another thing to note is that you do not need 2 years service to take your employer to tribunal for wrongful dismissal. 

Can your employer rely on new information to justify your dismissal once you have been sacked?

No, your employer can only dismiss you based on the information that is available to them at the time.

If new information comes to light after you have been dismissed, they cannot rely on this to justify your dismissal and defend any claim that you make against them.


What to do if you want to make a claim

Our employment law solicitors have a wealth of experience handling unfair dismissal compensation claims. We have successfully negotiated pre-action settlements and won tribunal awards for clients throughout the UK.

If you wish to make a claim you can call our approachable and professional team on 0800 756 6605 and you will recieve a preliminary assessment of your case.

Alternatively, you can also submit your details 24/7 online via our quick & simple enquiry form.

No win no fee

If you have a viable case we can help secure unfair dismissal compensation on a no win no fee basis.

Call us now on 0800 756 6605 to discuss your claim, or submit your details using our quick & simple enquiry form below.