Getting the Basics Right: What is unfair dismissal?
Joanna Rose · Posted on: May 24th 2024 · read
By law, employees have the right not to be unfairly dismissed. Generally, only those who have been employed continuously for at least two years can bring a claim for ordinary unfair dismissal. This is known as the qualifying service requirement. Employees with less than two years of service are usually not eligible to claim.
There are significant exceptions to the two-year rule. Employees dismissed for certain statutory reasons classified as automatically unfair are protected regardless of their length of service. Automatic unfair dismissal occurs when the decision to dismiss violates one or more of an employee’s statutory rights. Examples include:
- Asserting rights under the National Minimum Wage or Working Time Regulations.
- Acting as an employee or trade union representative.
- Reporting health and safety concerns at work.
- Making a protected disclosure (whistleblowing).
It is also automatically unfair and unlawful to dismiss an employee due to a protected characteristic, regardless of their length of service. Protected characteristics under the Equality Act 2010 include age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, sex, sexual orientation, race, religion, or belief.
Implications of Unfair Dismissal Claims
Unfair dismissal claims can have several adverse consequences for you and your business, even if they do not result in an award for damages or an order for reinstatement. The time and cost of defending a tribunal claim can be substantial. Allegations of unfairness can negatively impact workforce morale, especially if they lead to litigation.
When a tribunal finds in favour of an unfair dismissal claim, the employer is typically required to compensate the employee. This compensation, known as an award of damages, includes a basic award and a compensatory award.
Basic Award: A fixed sum calculated using a statutory formula based on the employee’s age, gross weekly pay, and length of service. As of April 6, 2024, the weekly pay is capped at £700, with a maximum length of service of 20 years. The formula grants 0.5 weeks’ pay for each year of employment under age 22, 1 week’s pay for each year between ages 22 and 40, and 1.5 weeks’ pay for each year over age 41. The maximum basic award is £21,000.
Compensatory Award: Compensates the employee for financial losses resulting from the dismissal, including loss of earnings and loss of statutory rights. This amount is capped at the lower of 52 weeks’ pay or £115,115 (as of April 6, 2024.) In some cases of automatic unfair dismissal, the compensatory award may be uncapped.
Proving Unfair Dismissal
In an unfair dismissal claim, the employer must prove that the dismissal was fair and that they acted reasonably in carrying it out. This places a significant burden on the employer to defend the claim, even if the allegations are unfounded.
Defending against an automatic unfair dismissal claim is more challenging. If an employee proves they were dismissed for a reason prohibited by law, the reasonableness of the dismissal and procedural fairness are irrelevant. Once it is established that an employee was dismissed for an automatically unfair reason, the employer cannot justify the dismissal or escape liability by arguing the dismissal was reasonable.
HR Solutions can correctly advise you on how to conduct short service dismissal proceedings in order to avoid costly claims of unfair dismissal.
