Unfair Dismissal Advice for Employers
If you have decided to dismiss an employee, it is important to identify the correct reason and follow the right procedure. If you get the reason or process wrong, the employee may make a claim for unfair dismissal against you, meaning you could face an employment tribunal.
Whether you are dealing with a misconduct issue, a performance concern or a redundancy situation, seeking legal advice from the start can make a big difference to the outcome for you and your business.
This page covers unfair dismissal advice for employers. If you are an employee looking for advice on making a claim for unfair dismissal, please visit this page.
Contact our employment law solicitors
Our employment law solicitors work with employers across the UK from our offices in Bristol and South Gloucestershire. We can help you manage dismissal processes fairly and support you if a claim is made. Call us on 0117 325 2929 or fill out our enquiry form.
What is unfair dismissal?
Unfair dismissal is a statutory right that allows eligible employees to challenge the termination of their employment. Claims are assessed by an employment tribunal, which will consider the reason for the employee’s dismissal and whether you (the employer) followed a fair procedure.
To bring a claim, an employee generally needs to have at least two years of continuous employment with you (this changes to six months in January 2027). However, certain dismissals, such as those connected to whistleblowing, or family-related matters, such as being pregnant or on maternity leave, can be claimed from day one of employment. These are known as automatically unfair dismissals, and the rules around them are stricter.
If an employee’s unfair dismissal claim is successful, you will need to pay them compensation. Currently, the level of compensation is capped at 52 weeks’ gross earnings or £123,543. However, from 1st January 2027, the statutory cap on compensatory awards for unfair dismissal will be removed, and compensation is unlimited. This means that employers may face higher-value claims.
What are fair reasons for dismissal?
There are five fair reasons for dismissal; however, while having one of these is necessary, you must still follow a fair and proper procedure.
The five reasons for fair dismissal are:
- Capability, i.e. the employee is unable to do their job to the required standard, either because of performance issues or ill health. You must be able to show that you gave the employee a reasonable opportunity to improve and provided appropriate support.
- Misconduct: in such cases, you must properly investigate the facts and follow a fair disciplinary procedure before making a decision.
- Redundancy, presuming you handled it with a proper selection and consultation process.
- Statutory illegality, i.e. if continuing to employ someone would breach a legal requirement, e.g. a delivery driver loses their driving licence.
- Some other substantial reason (SOSR): this is a catch-all category covering situations that do not fit neatly into the other four, such as a business reorganisation where redundancy is not appropriate, or the end of a fixed-term contract.
Barcan and Kirby’s expertise in handling unfair dismissal claims
Our employment lawyers work with businesses of all sizes and types. We provide straightforward, common sense legal advice that protects your interests as an employer and business owner. Our priority is to help you make the right decisions at each stage.
Our employment advice for employers includes:
- Legal advice before you dismiss an employee, to ensure you follow the right processes from the start
- Support during the dismissal process
- Advice on disciplinary policies and procedures
- Guidance on capability policies and procedures
- Dealing with grievances and appeals
- Responding to employment tribunal claims
- Drafting and negotiating settlement agreements
- Advice on protected and without prejudice conversations
- Breach of employment contracts, including restrictive covenants
- Business transfers and TUPE
- Constructive dismissal
- Disciplinary procedure
- Discrimination
- Drafting and queries relating to employment contracts
- Workplace policies and procedures
- Equality legislation
- Grievance procedure
- HR support
- Maternity, paternity and parental leave
- Redundancy and business restructuring
- Service agreements
- Sickness policy and procedure
- Advice on flexible working requests
- Equality, diversity, inclusion matters
- Workplace harassment
- Sexual harassment in the workplace
Unfair dismissal FAQs
Many unfair dismissal claims succeed not because the reason for dismissal was wrong, but because the employer did not follow a fair process. This is where a significant number of businesses come unstuck, and it’s an avoidable mistake.
When it comes to conduct issues, the Acas Code of Practice on Disciplinary and Grievance Procedures sets out the minimum steps an employer is expected to follow. If you fail to follow the process without good reason, any compensation awarded to your employee can be increased.
A fair disciplinary process includes:
- A thorough investigation before any disciplinary action is taken
- A written invitation to a disciplinary hearing, with enough notice for the employee to prepare
- The right for the employee to be accompanied by a colleague or trade union representative
- A disciplinary hearing at which the employee has the opportunity to present their case
- A decision made without undue delay, communicated in writing
- The right of appeal against the outcome
Even in cases of gross misconduct, employers should still carry out a proper and reasonable investigation and hold a hearing before dismissing. Skipping steps because you are confident of the outcome is not a risk worth taking.
When you receive a copy of the claim form (ET1) from the tribunal, you must respond using the response form (ET3) within 28 days. If you miss this deadline, the tribunal may make a default judgment.
You should seek legal advice as soon as you receive notification of the claim, so that your response is properly prepared, and your position is protected from the outset.
There are some exceptions to the two-year rule. These include dismissals that are automatically unfair, such as those connected to whistleblowing, trade union activity, or the exercise of a statutory right.
If any of these apply, your employee can claim unfair dismissal from day one of their employment. If you are dismissing someone with less than two years’ service, it is worth seeking advice to check whether any of these exceptions could apply, or you are likely to be subject to another type of claim that doesn’t require two years’ service, e.g. discrimination.
Yes. The employee must engage in Acas Early Conciliation three months less one day from their effective date of termination. If they fail to go through the Early Conciliation process, they will not be able to bring a dismissal claim.
If the Acas Early Conciliation process fails, the employee will have less than one month to issue an employment tribunal claim.
From 1st October 2026, the time limit is being extended to six months.
Yes, and many claims do settle before the hearing. You can settle an unfair dismissal claim through:
- Acas early conciliation;
- Direct negotiation; or
- A conciliation agreement (COT3 agreement); or
- A settlement agreement
A properly conducted protected conversation allows an employer and employee to have an off-the-record discussion about ending employment without that conversation being used as evidence in an unfair dismissal claim; it allows confidential pre-termination discussions. This usually involves offering a financial settlement.
This protection does not apply to automatically unfair dismissal claims or discrimination claims. It is worth taking advice before initiating this kind of conversation. Read our employer’s guide to protected conversations here.
If your employee’s unfair dismissal claim is successful, you can expect to pay a basic award, which is calculated in the same way as a statutory redundancy payment.
You may also have to pay a compensatory award, which compensates the employee for their financial loss as a result of being dismissed. This not only includes their wage, but pension contributions, subsidised accommodation and any benefits such as private medical insurance.
Whilst an employee has an obligation to mitigate their losses, e.g. to look for an alternative job, the tribunal will consider the actual loss suffered and consider what is reasonable and justifiable based on the evidence provided.
A tribunal may ask an employer to reinstate an employee, although this is rare. Most unfair dismissal claims result in compensation or a settlement agreement before it reaches a hearing.
Contact us for advice on handling an unfair dismissal claim
If you are facing a potential dismissal situation or you have received notification of an unfair dismissal claim against your business, we can help.
Call our Employment Law team on 0117 325 2929 or fill out our online enquiry form.